Yes, there a going to be a *couple* editions since NO ONE EVER TAUGHT US ANYTHING WE ACTUALLY NEEDED TO KNOW.
So, hello, welcome, my fresh graduates or soon to be graduates, or those overachieving 12th graders reading this. And of course the folks like me, lingo-ing their way in the first few years of “adulting” Can we share notes?
Well, here are mine anyway!
Disclaimer 1: I am not a financial expert. This is my personal opinion and knowledge. So, before you actually make any investment or big money move, please talk to people with more information.
Disclaimer 2: I’m an Accounting + Econ grad and have been a finance writer for three years now. So maybe things that seem common knowledge to me are actually not and I’m just an ignorant person weighing you down with jargon and such. If at any point you feel like that, please hit me up! Ask me whatever. I’ll answer it all – to my best knowledge.
1. Negotiate – Don’t accept the first number they say
Since I had just given my final exam 4 days before my first job interview, I was still in my student bubble. I was just so happy that I already had an interview and that someone was going to pay me to write that I accepted the first pay package they offered – which as I later realized was 25% less than the average pay for that role in the industry. And averages aside, I was good at what I did and had a solid CV, with a kickass internship. I could have easily negotiated for higher pay. It just didn’t strike me then that I could or should. Know your worth kids.
2. Your first salary forms the base for future jobs
Should have seemed obvious to me, right? But it wasn’t because no one ever spoke about these things in college! Another reason why point number 1 is so important. When you’re negotiating your first salary, you aren’t just negotiating for this job but in essence, for all future jobs to come because they will always use this as the base/standard to give you a salary hike (unless you get a masters degree!)
3. Don’t tell people how much you’re earning
This one has two parts:
A. Don’t tell your friends
Okay, look, your closest friends are fine. Like that one childhood best friend or your boyfriend/girlfriend. That’s a no-brainer! But everyone else? Yeah, they don’t need to know. I’ll tell you why.
If you earn more than them, not only will they feel shitty (despite the fact that the starting salary for different roles and industries can be starkly different and has nothing to do with one’s ability) but they may start expecting you to pick the tab when you’re out for lunch or on a road trip. If they earn more than you – yes, you will feel shitty and may even go down the rabbit hole of an existential crisis of if you should have made better choices in college (and even high school!)
B. Don’t tell your co-workers
For the most part, it’s an unspoken rule among adults that they won’t question each other of their salary at work. However, not everyone follows it. Sometimes it may be a noisy colleague wanting to know how much you’re taking home. Sometimes it may be that work-friend you have gotten close to. No matter what – do not tell them. It’s inevitable that at some point they will compare their salary to yours, their effort to yours and may form these weird complexes and judgements of what you’re deserving and undeserving of.
4. Save…from the first month itself
It’s very tempting to blow up your first few paychecks because when have you ever had so much money before!
And it’s all yours! You can spend it any way you like. Maybe you’re generous and buy gifts for all your friends and family. Pay back your sister for the money you had borrowed to shop for a whole new wardrobe before you started working.
So it’s easy to give yourself the – I’m so young, this is my first job, I’m still figuring things out – pass and not save. DON’T MAKE THAT MISTAKE. Save as little as 5% of your paycheck, but save each month. It’s not about how much you’re saving at first, oh no. It’s about building that habit to save and to make it a non-negotiable.
5. Emergency fund before investments
What comes after savings? Investments, yes but not really. One thing I took a whole year to understand is this – before you think of investing, build an emergency fund.
An emergency fund is 6-9 months of your salary that’s easily accessible and will be your knight in shining armour when adulting and its range of problems strike!
Whether you’re living with your parents or alone, having an emergency fund is crucial.
What’s critical to remember is that your emergency fund is supposed to be highly liquid i.e available to you whenever you need it. Hence, making a Fixed Deposit (FD) is the best way to go, I believe.
If you put that money in mutual funds or any other typical investment instrument, you will not have immediate access to the money.
Once you have your emergency fund in place, you can look at health insurance and then investing.