5 Smart Investment Tips For Your First Salary

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TABLE OF CONTENTS

Introduction

Your first salary can be a breath of fresh air. And it brings with it the beginnings of financial freedom. This, however, is conditional upon using your first salary - and every other paycheck that follows it - in a financially smart manner.

While most people may want to spend every penny wisely, it is not always possible. This is simply because a vast majority of people are unaware of financial strategies and of what to do with their money.

If you count yourself among this category of folks, worry not. You may not know how to save up or invest smartly. But it is never too late to learn. And that is just what we are going to do in this blog. You can then use the insights you have gathered to put your first salary to good use.

So, here are 5 financially savvy things you can do with your first paycheck (or any other paycheck too!)

  • Buy Life Insurance

    One of the best things you can do with your salary is securing your future financially. This is because life can be quite unpredictable. And in case something untoward happens to you, your surviving family members may find it hard to meet their financial needs. This is particularly true if you are the sole or the primary earning member of your family.

    Life insurance can give you the financial security you need. With guaranteed death benefits that are paid out to your nominees, a life cover is the best way to ensure your loved ones can achieve their life goals easily, come what may.

    There are different kinds of life insurance plans that you can choose from, based on your finances and your needs and goals. Term insurance is the most affordable kind of life insurance. But if you want to enjoy the benefit of savings coupled with insurance, you can buy an endowment plan instead. Alternatively, with a Unit Linked Insurance Plan (ULIP), you can get the dual benefit of insurance and investment combined in one product.

  • Start an SIP

    A Systematic Investment Plan (SIP) is a kind of investment strategy that allows you to invest small amounts regularly in the mutual funds of your choice. It is a convenient alternative to the typical lump sum investment that you make in most other investment options.

    The biggest advantage of starting an SIP is that you can begin your investment journey even if you do not have a sizable amount to invest. You can start investing in mutual funds with as little as Rs. 1,000 per month.

    You can make SIP investments in equity mutual funds, debt funds, money market funds, gold funds and more. This makes SIPs suitable for all kinds of investors, irrespective of their risk profile, their financial goals and where they are on their investment journey.

  • Contribute to your emergency fund

    An emergency fund is an essential part of your financial portfolio. And it is best to get your fund ready as early in life as possible. This way, you have a ready stash of funds to fall back on in case of a sudden emergency like a major home repair, an unexpected medical emergency or hospitalization, or any other major financial commitment that your typical insurance may not cover.

    Ideally, your emergency fund should be at least equal to six months' earnings. So, if your current monthly salary is Rs. 50,000, you can start by building an emergency fund of Rs. 3 lakhs. As your income grows, you can also enhance your emergency corpus accordingly.

    Keep in mind that your emergency fund should be easily accessible and liquid, so you can withdraw it to meet your urgent needs without any long waiting period. Your emergency fund should also be relatively low risk, so it does not erode or suffer major losses based on market movements. It is best to choose a mix of safer and more liquid investment options like liquid funds, short-term Recurring Deposits and debt mutual funds.

  • Buy a health insurance plan

    A health insurance plan is another essential financial product that you can buy with your first salary. Your premiums are likely to be lower since you are young. Additionally, although you may seem in the best of health at the moment, it is always a good idea to have a health cover in your portfolio.

    This is because healthcare costs are on a rise. And you never know when there may be an emergency hospitalization or an unexpected medical need coming your way. So, it is always a good idea to be prepared. Additionally, a health insurance plan also covers annual checkups in most cases, so you can keep track of your health while simultaneously securing your finances.

  • Pay your dues

    Lastly, if you already have some debts or liabilities like a personal loan or a student loan that you need to repay, it is essential to clear those dues as soon as you can. You can use your income to pay the dues and live debt-free.

    Paying off your debts clears up space in your budget for more savings and investments. This, in turn, can help you meet your life goals as per your schedule. If you can foreclose your debts using your salary without incurring any steep penalties, that is also something you can consider.

Conclusion

These are 5 important financial things that you can use your first paycheck for. Of course, it is not possible to check off all these 5 to-dos each month. You can chart out a financial plan to tackle the most pressing needs first, and then work towards the other goals. In case you are having some trouble figuring it out, you could always approach an expert for some professional assistance.

Read next: Why start investing as early as possible?

Wondering why it is important to use your first salary - and every paycheck thereafter - in a financially savvy manner? Well, that's because starting your investment journey early in life has its own upsides. Want to know the many reasons why you should start investing as early as possible? We have a blog that goes into the details.

Read it here

THINK YOUR SALARY ISN'T ENOUGH? WHY NOT SUPPLEMENT IT WITH SOME ADDED INCOME?

The ABSLI Assured Income Plus Plan gives you regular income payouts over the long term, in return for disciplined investments over the short term. Yes, that's right!

All you need to do is invest for a short period, and you get to take home income benefits for as long as 20, 25 or even 30 years.

This extra income can help you meet the rising costs of living, make it easier to pay off debts and even ensure that you meet your life goals earlier than planned. And that's not all. In addition to the income benefit, this plan also offers you a life cover with guaranteed1 benefits and loyalty additions!

Know More

1 Provided all due premiums are paid
ABSLI Assured Income Plus (UIN: 109N127V05) is a non-linked non-participating individual life insurance savings plan.
ADV/3/21-22/2509

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Term Products

ABSLI Life Shield Plan

A term insurance plan that offers you the flexibility of plan options suitable for your family's non- negotiable goals and ensure they need not compromise on their lifestyle. UIN: 109N109V06

  • Choice of 8 plan options
  • Cover your spouse under the same policy
  • Longer Life cover till age 85

ABSLI DigiShield Plan

PROTECTING multiple life needs with one plan is now possible. UIN 109N108V08

  • 10 Plan Options to suit your varied protection needs
  • Flexible death benefit pay-out options
  • Life insurance cover for 1 year or till age 100 yrs

ABSLI Saral Jeevan Bima

A simple plan to protect your family’s financial future (UIN 109N128V01)

  • Simple & affordable plan
  • Flexible premium paying terms
  • Enhance insurance cover with rider

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