First Job: First step to Financial Freedom

First Job: First step to Financial FreedomA first job is more than making an ‘earning’ debut. It’s about managing money, making budgets and paying bills for the first time. With campus placements and job opportunities opening up in other cities, it’s about moving out of home, freedom and paying rent for the first time. Those who’ve moved out, to start work-life, understand that managing money efficiently is the key to making living independently truly a liberating experience.

Before relocating there are many factors to consider – those that directly impact your expenditures – one–time and monthly: Take up a furnished apartment or set up your own? Shared accommodation or live alone? Close to the office or a nice quiet locality? Pubs, parties or travel? Weighing in costs and convenience, prioritising and working within the framework of one’s salary is an unenviable task! It makes sense to keep initial costs low, after all nobody wants to start work-life with debt.

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The formula

Making and sticking to a budget is the only way to be in control of your finances. Experts hold that 50:30:20 is the ideal ratio of a monthly budget. 50 – Fixed costs: rent & bills etc. 30 – Flexible spends: lifestyle and entertainment and 20 – Financial goals: saving. Money View Research Cell spoke to some first jobbers to understand how they’ve handled their new independent life. Meet Ali Mansuri from Pune, now in Bangalore; Amulya S from Bangalore, now in Chennai and G Vanaja from Vizag, now in Hyderabad.

a) Fixing the Fixed Costs

Ali Mansuri currently shares a 2BHK apartment with two other friends, after having moved out of a PG that proved to be inconvenient. They pay Rs. 21,000 towards rent (includes electricity and maintenance), split equally among the three. Ali finds the cost of living in Bangalore to be higher than Pune; food, particularly more expensive. He opted out of the office transportation facility (Rs. 2000 a month) because using his own bike turned out to be more economical. Amulya S found a PG further away from work because the rent + food + share auto expenses were significantly lesser than what she’d spend on accommodation alone near workplace.

b) Amends in Flexible Spends

When living independently it is easy to go overboard on lifestyle and entertainment expenses. Making a plan and keeping to it will help check overspending. Amulya has allotted Rs. 5600 in her total monthly budget for weekend entertainment (Rs.1000), shopping (Rs. 2000) and travel to Bangalore (Rs.2600). She finds shopping in Bangalore is cheaper, so she buys clothes only when she visits home. If she doesn’t travel in a particular month, the money is carried forward to the next.

c) Set Financial Goals

Saving may be the last thing on a first jobber’s mind, but think of it as spending for your future self! Ali Mansuri says by the 30th of every month, he finds himself impatient for his next salary, but saving Rs.7000 every month is a definitive. He’s opened a separate savings account for this and sends around Rs. 2000 to his mom every month.

G Vanaja, who works as a Process Associate in a large MNC in Hyderabad sets aside Rs. 5000 every month. When it touches Rs. 1 lakh, she intends to buy gold for herself and her family.

Ali, Amulya and Vanaja have evaluated their expenditures, and made changes wherever necessary in the first few months of their work-life. They have taken their first step towards financial freedom by keeping track of their expenses.