Savings
Always remember to save and then spend what you have, rather than spending and then saving what is left.

If you’re one of the millions of new graduates who are going to be entering the job scene this year, congratulations! The shift from being a student to having a career can be simultaneously exciting and daunting. Earning money, especially for the first time can be a heady feeling. However, figuring out your financial situation is of prime importance since your first job often helps form the foundation of your future.

Here are a few valuable tips on the best practices for financial prudence when you’re on your first job:

Start early, save more!

It is very tempting to be under the belief that you are too young to think about financial planning, or that it is too soon. “It is easier to plan earlier in your career than later”, says Dr CA Abhishek Murali, a chartered accountant. “There are fewer commitments earlier in life than later.” Unless you plan ahead, you will not be able to confidently take on financial challenges like your children’s education, the health issues that can afflict aging family and so on. “Get into the habit of investing regularly, early in your career” he adds.

For starters, put aside a part of your in-hand salary every month to get into the habit of saving. Always remember to save and then spend what you have, rather than spending and then saving what is left.

There is a misconception that you need to be earning a lot to be able to invest in something. With investment options such as Systematic Investment Plans (SIPs), you can start investing with as little as Rs 500 per month. And these are long-term investment options, so start saving now so you have a sizeable amount saved up a few years from now. Take professional advice on what type of an SIP works best for you, and try to start saving from your first salary.

How Flexible is Your Pay?

Your salary will be structured in such a way that a portion is fixed and a portion is flexible. Understand how much is flexible, because this flexible part of your salary usually consists of benefits like allowances and reimbursements. “Optimise your structure with reimbursements. Expenses like telephone, petrol, food coupons which are incurred by you can be claimed from the employer and this will be tax free,” Abhishek says.

Sit down with your employer’s Human Resources/Accounting team to understand your salary structure better and plan your expenses accordingly.

Track your spending

Take your time to understand your salary structure, the insurance policies that your company has for its employees and incorporate budgeting in to your everyday life. Keep a track of every penny you spend. While this may seem like a daunting task, there are several apps such as WalnutDollarBirdFudget or Daily Budget that make it easy for you to track your expenses. Tracking expenses always helps you figure out how much you are spending on what and optimise your money accordingly.

Stay Organized

Apart from keeping track of your spending, make sure you are on top of submissions related to any tax planning investments or loans that you are undertaking. “Many salaried employees miss the date to submit the above and lose the benefits of their tax planning and end up paying higher tax. Hence, ensure to keep track” says Abhishek. Apart from CA professionals, there are also websites such as ClearTax that help you understand how to file taxes at the end of each financial year.

Don’t Lose Sleep Over Tax

Paying taxes are inevitable when you are making money. Pay it correctly and proudly! “Don't lose your mind fighting over this when you have a good job or a good pay”, says Abhishek. If you have any doubts over the amount of tax you are paying and are unable to get a solid answer from your employer, seek professional guidance instead of trying to fix things yourselves.

One cannot emphasise enough about the importance of getting your finances organised when you are starting out on your career. The earlier you get a grip on your money, the stronger it will get.

{Rupee Rani is a monthly column on personal finance. Send in your questions and feedback to rupeerani@thenewsminute.com}