Congratulations! Your efforts have been rewarded. Your first job is a respectable one. What actions can you take right away to improve your financial future? Starting a new job always has a special feeling to it. Being financially independent and able to stand on one's own two feet is empowering.

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Getting started on your first job is a significant milestone. While this financial freedom is empowering, it also comes with a significant degree of fiscal responsibility. As a new earner, you have to learn the art of savings and investment to secure your financial future. This blog outlines easy saving tips new employees can leverage to ensure their salaries lay the foundations of a secured financial future.

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If you’ve just entered the workforce, learning a few saving tips can help you better manage your finances. Here’s a list of saving tips for new employees.

As a new earner, you may find it difficult to differentiate between wants and needs and spend more than you’re saving. Creating a monthly budget can help you track your expenses and avoid going overboard. Additionally, categorising your expenses as ‘wants’ and ‘needs’ can help you minimise unnecessary spending and save more. Budgeting your income and expenses allows you to estimate how much you wish to direct to savings and investments. Instead of the old pen-and-paper route, you can easily budget your monthly expenses using digital budgeting tools. In fact, most budgeting apps even let you set upper limits on expenses to prevent overspending.

If you are a new employee, insuring your life and health may not be top priorities on your list. However, purchasing insurance covers early can, in fact, help you save money in the long run. A life insurance policy offers a sense of financial security to your loved ones, while a health insurance policy keeps you protected against medical expenses. Buying an insurance policy at a young age often means lower premiums. Insurance companies are ready to offer better coverage and affordable premiums because people in their 20s are considered less risky policyholders. However, when picking a life and health insurance plan, you must carefully assess the terms and conditions of each, focusing on their inclusions and exclusions. While term plans work best as pure life covers, you can also opt for ULIPs that come with an investment component. Similarly, for health insurance plans, you should review the riders available, co-pay, and coverage inclusions.

Signing up for new credit cards can be a tempting option for new employees. While credit cards offer payment convenience and rewards, they can also encourage overspending. As a new hire, you should use your credit card responsibly only for purchases you can afford to pay off. Additionally, you should aim to pay off the monthly credit card balance in full since carrying balances can result in high interest charges and debt build-up. Similarly, if you had taken a student loan to finance your higher education or a two-wheeler loan to buy a bike in college, start planning its repayment from the day you join the workforce. Create a debt management plan to repay high APY loans first and avoid interest build-up.

Understanding the salary structure of your company is crucial when it comes to optimising savings. Your CTC or Cost to Company is made of different components, including base pay, allowances, and benefits. Many companies have introduced flexi benefits in their salary structures, allowing employees to choose suitable allowances from an array of benefits. Including tax-exempt allowances like reimbursements for travel and fuel expenses, phone and internet, newspapers, as well as food coupons can help lower your overall tax liability. In fact, the taxable special allowance in your salary can be lowered to add tax-exempt allowances. Restructuring your paycheck in a tax-efficient manner means leveraging different exemptions offered under the Income Tax Act. New employees can leverage this saving tip to negotiate with the company’s HR for a better salary structure.

Efficient tax planning remains one of the most handy saving tips for new employees. If you have just started earning, focus on familiarising yourself with the Indian taxation system. Understand how income tax is levied and the allied exemptions and deductions. But more importantly, focus on how you can leverage tax-efficient investment instruments to minimise your outstanding liability. Under section 80C of the Income Tax Act of 1961, you can claim a tax deduction of up to Rs. 1.5 lakhs every year on qualifying investments. Contributions to investments like ELSS, NPS, PPF, and tax-saver FDs qualify for section 80C deductions. Therefore, investments in tax-saving instruments can help you diversify your holdings, maximise returns, and minimise tax outflows—all at once.

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Sound financial planning starts with the creation of an emergency fund. No one can predict unforeseen emergencies like medical issues, job loss, home repairs, or natural disasters. By setting money aside in an emergency fund, you can tackle these unexpected problems without worrying about the cash flow. Financial experts suggest that new employees should strive to set aside at least 3-6 months of expenses in a liquid account as soon as possible.

Simply saving your income every month will not be enough. You have to ensure that your money makes money. To do so, you have to diligently invest the saved funds. As a new employee in your early 20s, you may have little to no obligations, which means you are in a better position to divert a sizable portion of your earnings to investment. Depending on your financial goals and risk appetite, you can choose to invest in a wide range of assets like equities, mutual funds, ETFs, gold, real estate, and currency. Moreover, given your young age, you can even take on riskier investments like share trading that offer better-than-average returns. Always remember that creating a diversified portfolio early helps your investments grow over time, resulting in better returns. This makes sensible investing one of the most essential saving tips for new employees.

When it comes to retirement, it's never too early to start planning. In fact, financial experts believe the earlier you start, the better it is. If you start planning in your 20s, your corpus has ample time to grow and compound over the next 35-odd years. You can start by estimating the value of your ideal retirement corpus based on projected expenses. Doing so allows you to set a target and dedicate funds for retirement accordingly. Remember to factor in inflation levels to ensure your corpus does not lose value over the years. New employees can consider NPS to start pension planning. Managed by the PFRDA, NPS invests in market-linked instruments to accumulate a retirement corpus.

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Your first job opens doors to financial independence. While this financial independence is crucial to fund your day-to-day expenses, it is also essential to plan a secured future. Saving a certain portion of your salary every month can help you ensure financial security for the coming days and years. The saving tips for new employees highlighted above can be a handy guide for new earners seeking to streamline financial planning and money management.