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How to manage your first salary

05 November, 2017

How to manage your first salary

Getting your first job and, with it, your first salary can be very exciting. However, it also comes with an array of financial responsibilities that, previously, you might never have even felt any need to consider. You are most likely to receive your salary as a monthly payment in your bank account – and, once this money comes in, you should be careful with how you handle it for the best results.

Check that you are getting paid the right amount

Each month’s salary will be paid as a lump sum and also appear on a payslip. When you are handed this, check it carefully. It might indicate that you have been emergency taxed, but don’t fret, as the money will be paid back at the tax year’s end or possibly after a few months.

Alternatively, you may have been mistakenly given the wrong tax code and so be overpaying. Underpaying is possible, too – and would land you a big tax bill come the year’s close.

Be careful with your accommodation costs

If your new job requires you to relocate, the costs of doing so could seriously eat into your pay packet – especially if you choose to live by yourself or in a luxury apartment.

However, there are various means by which you can trim the costs. Consider sharing rented accommodation with other people, an arrangement which can split the bill several ways. Also budget for the hefty deposit for which the landlord would likely ask, advises This is MONEY.co.uk.

Avoid getting into debt

You are likely to have various outgoings – including energy and water expenses, National Insurance, and whatever you pay to regularly use your mobile phone. All of these can seriously add up to leave you with little of your salary left.

Worse, you could be tipped into debt – particularly if you have overestimated how much you can afford. Debt is worth avoiding entirely where possible if you want to avoid interest charges.

Pay off debt

If you still accumulate debt, you should make a priority of paying it off as soon as possible. Ideally, this should be before the month’s end; otherwise, you would pick up interest payable on top of the debt. Sadly, the interest fees on overdrafts, credit cards and loans can be worryingly high.

Should you be interested in saving, then clear your debts first; otherwise, the interest gained on the savings could too easily be cancelled out by the expense of the debts.

Start saving

Once you are debt-free, you can benefit from regularly putting aside some money, however little. After all, saving is a good habit to get into – and, even if you can spare just a few pounds every week, that money can build up into quite an impressive pile in the long term.

Of course, a high salary would ease your saving endeavours – and, if you are currently at university and preparing to leap into work, you could carefully peruse CV-Library for graduate jobs in London.

 

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