Career & Education

How should I spend my first pay cheque?

Sunday, March 04, 2018

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You have finally completed that coveted university degree and landed your first full-time job.

You're probably already thinking about all the financial goals you would like to achieve and how you will be spending your first pay cheque. Chances are new work clothes, accommodation, and maybe even saving for your first car are among your objectives.

however, According to Rose Miller, grants manager at the JN Foundation, chief among your objectives should be starting an emergency fund and saving for retirement.

“Naturally, retirement is not on the minds of most 20 year olds, but if you want to ensure that you have a steady source of income when you retire or have enough funds to withstand an emergency, it is important that you start saving from the moment you get your very first pay cheque,” she said.

Miller, who also leads the JN BeWi$e empowerment programme, says unfortunately many people discover far too late that they have not put aside enough funds to provide a cushion in the event of an emergency, or for their retirement.

She notes that social pressures generally push people to spend when they should be saving. However, she said it's important for Jamaicans to inculcate the habit of thrift.

“No matter how much you make, at the end of the day, it is what you save that really matters,” she states.

Miller advises that to ensure that you are on the right track, the general rule is to save at least 10 per cent of one's monthly salary.

She further recommends that a benchmark to adopt is that people in their 20's should aim to save 25 per cent of their overall gross salary.

“That includes retirement account contributions, matching funds from your company, cash savings, or money you have invested elsewhere,” she explained.

She adds that by age 30 one should have the equivalent of one's annual salary saved.

“Therefore, if you earn $1 million a year, aim to have $1 million in savings when you hit 30,” she outlines.

The Multiplier Effect:

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