First job, first salary: make your money count

Your first pay cheque lands, and suddenly that dinner, a new phone or weekend getaway feels within reach. After years of relying on your parents, earning your own money can be exhilarating.

But once rent, transport and loan repayments enter the picture, that salary can feel surprisingly small. So how do you enjoy it while building a financial footing?

That is where a budget can help: making room for both today’s needs and tomorrow’s goals. Licensed financial planner Rajen Devadason recommends a three-tier structure:

• First: Save and invest
• Second: Practise generosity
• Third: Live on what is left

The first tier means “paying yourself first”: setting aside a portion of each pay cheque for savings and investments as soon as it arrives, rather than waiting to see what remains at the end of each month.

Standing instructions and separate accounts can help make this a regular habit. Set up automatic transfers each payday and keep your savings in an account separate from the one you use for bills and daily purchases. This helps you save consistently and reduces the temptation to dip into the money.

The second tier involves giving to charitable or religious causes while the third covers everyday expenses, such as food, fuel or public transport costs.

“The third tier also includes giving money to your parents, repaying your student loan and occasional treats,” said Devadason.

He encourages setting aside money for your parents each payday, especially if living under their roof helps keep your expenses down. “I think it’s a wonderful habit to inculcate and it builds character,” said Devadason, 62.

Whether giving to parents, saving or investing, Devadason’s advice is to go “low and slow”, increasing the amounts as your finances improve.

For someone earning a gross monthly salary of RM3,000 and taking home about RM2,600, monthly savings could begin at 1% to 3% of take-home pay. Another 1% to 2% could go towards charitable or religious causes, leaving the remainder for the third tier.

One priority is an emergency buffer fund covering three to six months of living expenses. The target should be based on what you spend each month, including debt repayments, rather than how much you earn.

Keeping some savings within reach also matters. Devadason cautions against putting too much spare cash into voluntary EPF contributions, as much of that money may not be accessible in an emergency.

Building up savings is a start; learning how to grow your money is the next step.

“You don’t want to get into the habit of only saving and never learning about investing,” advised Devadason, a member of the Financial Planning Association of Malaysia.

Part of the learning is to look beyond the potential gains and consider the risks. “The more risk we take, the more return we may get,” he cautioned, emphasising the word “may”.

Enjoy today without borrowing from tomorrow

Managing money also means knowing when to hold off on a purchase. Splitting the price into small instalments may make it easier to say yes today, but those payments will take a bite out of future pay cheques.

According to the finance ministry, Malaysians aged 30 and below made 65.9 million buy now, pay later (BNPL) transactions worth RM5.4 billion in the first half of the year.

As of June 30, they had RM2.4 billion in outstanding BNPL financing. Of that, RM96.8 million was classified as non-performing, equivalent to 4% of their outstanding balance.

Devadason’s concern is how those future repayments will be met. If you need credit because you cannot afford a purchase now, consider whether your future pay cheques can cover the repayments alongside your usual expenses.

He advocates delayed gratification: postponing some pleasures today so that better experiences become possible later.

That does not mean skipping every celebration. When a salary increase or a cleared loan leaves you with extra cash, he suggests dividing the extra money three ways: enjoyment, savings and investments. This helps prevent every increase from disappearing into a more expensive lifestyle.

Beyond managing each pay cheque, Devadason encourages young workers to invest in their own growth.

“Have fun at work and focus more on learning than trying to maximise your early income,” he said. “Turn yourself into a lifelong learner.”

For financial guidance, watch the Financial Planning Association of Malaysia’s weekly ‘Money Mastery’ videos on Facebook or explore your spending habits through its Money Style Check quiz.

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