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Grow your money

October 28, 2020

How to spend your first paycheck

Becoming financially independent is both a reward and a responsibility. For the young adults out there, here’s what you need to know before spending your first paycheck.

Ah…yes! The rewarding feeling when you receive your first paycheck. For a second, that pair of shoes you saw on sale flashed before your eyes. After a few clicks on your phone, you have just blown off your first paycheck. Hey, don’t feel too guilty. That’s normal and it’s okay. As young adults, the joy of spending our hard-earned money without relying on our parents is incomparable.

But what if I tell you that your decisions, even small ones, can help you create a more independent future? Looking back at when I received my first paycheck as a freelancer, I couldn’t help but list all the items to buy in priority. If there is anything that I regret, it would be spending most of my salary on the things I thought I needed. Instead, I ended up with a pile of clutter with no savings at all. The good news is, you don’t have to make the same mistakes.

Let me share with you some tips on how you can figure out where to spend your first paycheck so that you may enjoy the fruits of your labor in the future. You can start by having the right mindset as early as now. 

  1. Figure out your goals
    Ask yourself: “What is it that I really want to achieve?” Do you want to live independently before hitting 30? Are you planning for a big purchase like a car or condo? Whatever your goals are, the best time to start thinking and saving up for them is today.

  1. The “Spend, Share, and Save” method
    In a recent SUN Talks with Inigo, the Sun Life Ambassador talked about the “Spend, Share, and Save” method. To follow this method, you allocate portions of your paycheck in three buckets.The first is the Spend bucket wherein you will have to budget how much you will spend on your needs and wants and to keep a close track of your expenses. The Share bucket is where you will allocate an amount that you will use to show your gratitude to your family and friends by sharing some of your blessings with them. Lastly, the Save bucket is an amount of at least 20% of your income as savings.

 

  1. Prevent yourself from incurring unnecessary debt
    One key to living in peace and prosperity is to be debt-free. Do a quick audit of your bills and prioritize the payments that should be made. “Align your mind, heart, and work of hands,” Inigo said. For the mind, it is essential to set your goals so it would be clear why you are working for it. Our hearts are to blame for over-spending. Sometimes, you can’t help but feel overwhelmed and your emotions will push your discipline to its limit. Practice self-control to avoid unnecessary spending. Most importantly, execute your plans. Be bold, money-wise, and innovative to stick with your long-term goals.

 

  1. Build your emergency savings
    Most of us overlook the fact that sometime in the future, we may encounter a situation that will result in extra expenses. It could be minor such as replacing a broken stove or major such as paying for hospital bills. An emergency fund will save us from these unexpected circumstances. Given the pandemic, the world witnessed and even experienced the hardships of being unprepared as businesses were closed and jobs were lost. This only proves the importance of saving money for emergencies.

    The question is, “How much should I save for my emergency savings?” To ensure that you will have enough savings during a crisis, it’s good to set aside six to nine months’ worth of your average monthly expenses.

 

  1. Invest in an insurance plan that’s fit for your goals
    You are in a phase of life wherein you have the energy to work and the opportunity to explore the world. The future is indeed in your hands! One of the most important components of successful financial planning is having a good financial foundation to protect you against the uncertainties of life. Choose the life insurance product that can help you best in reaching your financial goals. To further understand the basics of being insured, you can learn more by watching the replay of Inigo’s SUN Talks session.

 

If you are interested in building your independence fund after getting that first paycheck, you might want to check out Inigo’s Adulting Starter Pack!

What’s in the Adulting Starter Pack for your finances?

Inigo’s Adulting Starter Pack is the recommended insurance and investment bundle for young adults  who are just starting to earn and have at least 2,000 pesos extra a month to set aside for the future. As a young adult, you can save up for life’s milestones such as traveling, moving out, or owning a car. You can even get life insurance to prepare to live independently or to support your family financially if an uncertain event happens.

Included in this starter pack are the Sun StartUp and Sun Life Money Market Fund. What makes this package awesome is that you can enjoy affordable term life insurance with money-back after 10 years. You can use this to fund your goals and for just about anything under the sun! The Money Market Fund is perfect for beginner investors who might not be comfortable with volatility since 1,000 to 2,000 pesos per month is already a big amount for new earners.

You can easily get a quick product quote in seconds by simply visiting the Sun StartUp page and using the “Get a Quote” tool. With this feature, you can just conveniently type in how often you can make payments and how much you’re willing to save for 10 years. To fully understand and make an achievable financial plan, connect with a Sun Life advisor today through this form. They are in the best position to answer your questions with regards to insurance and investments.

That’s it! This may be a lot for you to digest at first but it will definitely sink in once you ask for a Sun Life advisor’s assistance. By understanding your financial health, you will be able to accomplish your long-term goals. Aside from these tips, remember to enhance your skills and work hard while you’re still young. But don’t forget to enjoy life, spend time with your family, treat yourself every once in a while, and do what makes you happy as long that it is right for your environment and your pocket. Get insured today for a brighter future!

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