There are few things more financially exciting than getting your first pay cheque. It’s probably smaller than you’d thought it would be, but it’s a real thrill nonetheless. You’ve probably dreamed about all the things you plan to do with the cash. But after a few days you may come to realise that your pay cheque doesn’t go as far as you’d like.
While every person is different, there are some general mistakes that most people make when they first start earning. Here are the most common of these errors:
Not having a proper budget
Sure, you may have set aside money for the basics (rent and food), but have you budgeted for absolutely everything you need? Learning how to create a thorough and accurate budget is important when you first start. The habits you form now will train you for the future. Putting together a budget is not simply about listing your basic expenses. Of course, you’ll need to stick to this budget as well.
You may think you’re earning too little to save right away, but you’re not. It doesn’t have to be a large amount every month. It can be as little as R100. Just like creating a budget, it’s important that you get into the habit of saving. Plus, that little amount will eventually add up and you’ll be glad you set it aside. You never know when an emergency is going to arise or you’re going to really need a car. If you save correctly, you could be browsing through pre-owned Volkswagens sooner than you think.
We’ve all been there. We’ve all done that. We’ve all been on the shopping spree that left us broke and full of regret. This is where budgeting comes in handy. If you need new clothes or really want a new gadget, you should work it into your budget. Carefully considering a purchase before you buy it should become second nature to you.
Whether you’re taking out a loan from the bank or borrowing cash from a friend, it’s always a bad idea. If you can’t afford it this month, how are you going to pay it back next month without breaking your budget again? Taking a loan or using your credit card means you have to pay back everything with interest. Borrowing money is a slippery slope and you could easily end up in a cycle of debt.
Chances are that you’ll end up making these mistakes at some point, but the trick is to train yourself to be financially responsible from the very beginning.