Landing your first job and receiving your first salary is an exciting milestone, but in an era of rising living costs, making that income stretch can be challenging.
With expenses such as rent, transport, groceries and utilities becoming increasingly expensive, careful financial planning is more important than ever.
From creating a budget and building an emergency fund to avoiding unnecessary debt, there are several ways first-time earners can make their salary go further and lay the foundation for long-term financial stability.
How to handle your first salary
Salem Nyati, Consumer Financial Education Specialist at Momentum Group, says what you do with your first few salaries could shape your financial life for years to come.
“Your first salary is far more than a deposit notification on your phone,” she says.
“It is the beginning of your financial life. Whether it becomes a foundation or a fleeting moment depends almost entirely on the choices you make in those first few months.”
Learning what school never taught you about money
Nyati adds that most people enter the workforce without having received any formal financial education. Understanding the basics of how money actually works is, therefore, the first and most important step a young earner can take.
She notes that one of the most dangerous habits a young professional can fall into is spending according to what they see around them. “Social media, peer pressure and the visible lifestyles of colleagues can create a distorted picture of what is normal or expected,” says Nyati.
“You often compare yourself to a filtered version of other people’s lives. You do not see the debt, the financial stress, or the compromises behind the scenes on social media. Trying to match someone else’s spending habits can quickly lead to overstretching your own budget.”
Understanding five basic principles about money
Nyati highlights that the foundation of good money management comes down to understanding five basic principles:
- How to earn
- How to spend wisely
- How to budget
- How to invest
- How to grow wealth incrementally over time
“None of these concepts require complexity,” she says. “What they do require is consistency and honesty with yourself. Spend according to your goals, your values and your reality, not out of pressure from someone else’s highlight reel.”
A budget is not a restriction, but a road map
Nyati says for someone who has never earned a regular income before, the idea of budgeting can seem unnecessary or even discouraging.
“Budgeting is not about restriction. It is about allocation. It is simply the process of telling your money where to go, instead of frivolously spending it and wondering where it went.
“A practical and widely recommended starting point is the 50/30/20 framework: allocate 50% of your net salary towards needs such as rent, groceries and transport; 30% towards personal wants; and the remaining 20% towards savings and any debt repayment.”
She highlights the importance of tracking your spending, even for one month. “Small, habitual expenses such as daily coffees, streaming subscriptions and impulsive online purchases tend to accumulate quietly in the background,” says Nyati.
