Starting your career is cause for celebration - and bring it on, it is what you deserve! But what comes next is far more important, making the right decisions to build financial confidence as early as possible in your career journey. Here to help is personal finance guru and co-host of South Africa’s first and only financial education TV show, Sanlam’s Money-Moola Family Game Show, Nicolette Mashile.
Here is the Financial Fitness Bunny’s Glam Guide for kicking your career off the right way
Negotiate your first salary
Getting your first job can be incredibly exciting. It is the moment you take your first steps towards financial independence. But did you know that you can negotiate your first salary? Most of us don’t because we’re not equipped with the confidence nor the information to know that negotiation is standard practice in the workplace. While the nature of today’s job market can make the idea of negotiating seem difficult, doing so often yields good results.
Nicolette says, “I think many people are afraid of negotiating their salary, especially at a young age because they don’t know that they have that option. I think they are also often so excited about their first job that they don't interrogate the salary too much. However, it is a good idea. Do the maths about how much your expenses amount to and see how your salary fits in with that. Also, remember to research the average salary for your role and experience.”
Nicolette also encourages people to run the numbers when negotiating their salaries. “Look at your tax implications and if you were to factor in a higher salary, how much tax would you then be expected to pay. While there is room to negotiate a higher salary, you don’t want it to be eaten up by tax.”
Understand your employment contract
It is crucial to read over the details of your employment contract thoroughly and understand the structure of your total cost to company. Nicolette says that in some cases the net salary may not be as high as you’d want it to be, but it may be compensated for with group benefits, like medical aid and retirement plan but these items need to be outlined in your contract.
“Don’t get fixated on the amount that clears in your bank account. You should have a checklist of financial products that will make the quality of your life better, that will mitigate risk, and help you build a financial legacy that will ultimately give you financial confidence. It’s incredibly important for young people to take control of their finances and that starts with having the right information.”
Budgeting and saving
As the backbone of any financial wellness journey, the earlier you learn to budget and save, the better. Part of that includes budgeting based on your “take-home” or net salary (salary after taxation, PAYE deductions, etc.) rather than your gross income. Many individuals get confused between their gross and nett pay and there is a big difference between the two. Be sure to ask your employer for a ‘dummy’ pay slip so that you can see what your net salary is.
Once you know how much money you are earning, set up a budget and save however much you can.
Nicolette says, “If you don’t immediately start to budget and save you will learn bad habits in the first few months of working and it will be incredibly hard to unlearn.” She also believes that fostering the culture of saving and budgeting pays off further down the line. “If you start saving as soon as you start working, by the time you begin making big financial decisions, you will already have savings to help you with those big financial moves that come up with moving up the career ladder.”
Set your goals
One of the most important things you can do is set financial goals. Goal setting and planning is an important step to becoming financially confident. By deciding on your goals and setting them out in front of you, you’ll be in a better position to put your plans into action when your first salary comes in. Your goals can be both long-term, like saving for retirement, or short-term, like building an emergency fund, and they will form the basis of your financial planning.
According to Nicolette building an emergency fund will help insulate you when life takes its inevitable twists and turns. Nicolette says, “The more we know, the better we do, and the better we do, the more financially confident we can be. So, if you feel you don’t know enough, don’t be afraid to ask someone close to you who knows better or consult a financial advisor. If you can get your finances right from an early age, achieving your goals will be so much easier.”
To learn more about how to manage your finances with confidence catch Nicolette on the Sanlam Moola-Money Game Show on Sundays at 19h30 on SABC 2. The Sanlam Moola-Money Game Show is SA’s only financial education gameshow, designed to entertain and educate South Africans about their money.
