Be smart the moment you get your first salary cheque

I wonder if you, too, watched the throngs of holidaymakers returning from their chosen resorts, wondering what all the young people sitting in cars and terminals planned to do with their lives after university, college or matric.

I wonder if you, too, watched the throngs of holidaymakers returning from their chosen resorts, wondering what all the young people sitting in cars and terminals planned to do with their lives after university, college or matric.

Some will become incredibly successful in their chosen professional career, others will prove their entrepreneurial ability and start their own companies and there are those who might become employees of various businesses.

That brings me to my point for this article: your first pay cheque. At the end of January 2009 thousands of fortunate young people will receive their first salary. How exciting! Your first hard-earned cash deposit in your bank account is somehow so much more of an event than being handed pocket money or earning money through a temporary assignment.

But just as important as it is to reach that landmark occasion is the need to initiate sound, responsible financial planning that will pay dividends.

The best advice I could ever give any new employee is to start your financial planning right away - before you bank your first cheque. Whether you go for an endowment policy, buy unit trusts or open a savings account, if the deductions happen from your first salary cheque you won't miss what you never had.

Upfront, planned payments ensure that responsibilities are met. The logic here is the same as what my message to you is today: compel yourself to invest part of your salary before you get used to having your whole salary to spend!

How much should you save each month from your first salary? Accepting that each individual has different needs, as a general guideline I would suggest that you set aside 10% to 15% of your salary for your initial financial planning.

Consider life and disability cover but don't forget to check what your employer has done in terms of a group scheme for all employees. Funeral cover might also be included.

Initially, these amounts might be sufficient but it is important to reassess your personal requirements every year as life circumstances change, such as getting married or the arrival of a baby.

Remember, at the age of 20 or 30 you will find that life products are surprisingly inexpensive since it is your health that buys insurance.

Believe me, it's a great feeling to be financially independent at last. You appreciate this more fully when you receive your first cheque. To remain financially independent, though, involves some worthwhile sacrifices.

Heed my advice: discipline yourself and start saving from your very first salary cheque. To maximise opportunities you need qualified, professional advice,and to develop a long-term relationship with a financial adviser.

l The writer is a director of Pioneer Financial Planning. Visit www.pioneer.co.za or e-mail help@pioneer.co.za.

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