Jessica Beattie
According to the Quarterly Labour Force Survey, the number of employed South Africans increased by 399,000 in the third quarter of 2023, with the number of employed youth increasing by 237,000. If you’re one of these newly-employed young people, or if you’re starting your first formal job in 2024, there are a few things that you should be doing with your salary, starting from month one, to put you firmly in charge of your financial future.
All income earners, and especially young South Africans, should prioritise a financial roadmap that will see them from day one on the job, right through to retirement. With a little discipline, you can set yourself up for financial success.
Here are top tips for planning your future from your first payday:
Set a budget and stick to it
The secret to managing your money well is paying yourself first. This means saving a percentage of your income each month and then using what’s left to pay the bills. That way, you’ll have money available for life’s curveballs. Watch out for small expenses, like takeaway coffees and extra data to rewatch your favourite TikTok videos. When made regularly, these purchases can stealthily eat away at your monthly budget.
With today’s cost of living, we tend to indulge or reward ourselves with smaller luxuries rather than big ticket items, but don’t be fooled: your routine cuppa two or three times a week can easily cost you R400 or more in a month. There’s no need to forego these ‘spoils’ entirely but it’s important to be conscious of how you spend, and be intentional when choosing to splurge. Monitor your spending either on paper or using an app. Knowing how much you spend, and on what, enables you to adjust your budget as you go, and rein in unnecessary habits or hidden costs.
Set your goals and plan for them
Want to buy a car by age 25, invest in a home by age 30, and start a family by 35? Whatever your ambitions, you need to start planning for the future you imagine. Accountability is one of the most important aspects of gaining your financial independence. Your financial health is up to you: you can’t rely on others to achieve it or maintain it, but you can look to a financial adviser to help you plan for it. Write down your goals and, together with your financial adviser, create a savings and investment plan to support them. It doesn’t matter how much you can afford. Start small and start today. Set achievable milestones, stay consistent and persevere. You'll thank yourself over time.
Lock in the insurance you need
Start with the basics: medical aid, and life and car insurance are your safety net in case the unexpected happens, and income protection should be top of your life insurance list. Your income is your most important asset and should be protected against your most likely risk, which is not being able to earn due to illness and injury. In 2022, income protection claims accounted for 58% of Bidvest Life’s payouts1. This is more than the rest of Bidvest Life’s portfolio combined, and shows the importance of insuring yourself against both minor and serious injuries and illnesses that could affect your ability to earn, which will, in turn, disrupt or even derail your financial stability. Income protection should be your number one priority. It provides security when you need it the most, and pays all your other insurance, medical aid, household expenses, and student loans when you can’t earn.
Having a job doesn’t guarantee you financial freedom. But, being intentional about your expectations, mindful of your spending habits, and working with a financial adviser to put a long-term savings and investment plan in place – starting from your very first pay cheque – will take you a long way towards achieving your financial aspirations.
* Jessica Beattie is acting chief marketing officer at Bidvest Life.
PERSONAL FINANCE