Transitioning from being a student to a full-time employee can be overwhelming, but with careful planning and responsible financial habits, you can set yourself up for long-term financial success.
Let’s explore some useful tips for planning your future after student loans, specifically tailored for individuals beginning their careers in South Africa.
Review Your Banking Options
Transitioning to full-time employment may require reviewing your bank account. Research different account types or visit your bank to find one that suits your needs.
Consider features such as low fees, convenient access, and online banking options. Use banking apps offered by different banks to track, monitor, budget, and manage your accounts seamlessly.
Developing good budgeting habits and tracking your expenditures will help ensure that your spending aligns with your income.
Saving and Investing
To create sustainable wealth, it's crucial to start saving and investing as early as possible. Make saving a habit and allocate a portion of your income towards future goals. Automate your savings by setting up regular monthly deposits from your paycheck.
Consider investing in approved retirement funds, such as your employer's pension fund or an individual retirement annuity, to benefit from tax advantages while building wealth. Maintain a balanced investment portfolio that allows access to funds for short to medium-term goals.
Building an Emergency Fund
Building an emergency fund is essential to safeguard against unforeseen, high-cost events. Aim to save enough to cover at least three months of living expenses.
Factors such as your current living costs, risk of unemployment, and additional income streams should determine the level of your emergency fund. Keep these funds separate and use them only for genuine emergencies.
Manage Your Debt and Credit History
Understand the terms of your student loan contract to ensure timely repayments, as late payments can impact your credit score. Use debt responsibly and only borrow what is necessary and affordable.
When financing your prioritized purchases like a vehicle, research your needs and budget to avoid overspending. Focus on maintaining a manageable debt-to-income ratio and prioritise spending less than you earn. A good credit score is crucial for future financial opportunities.
Protect Yourself from Risks
While life cover may not be a priority for young, single graduates with little debt, consider mitigating risks of illness or disability that could impact your ability to earn an income.
Private medical aid coverage and income protection benefits can provide valuable protection. Seek advice from an independent advisor for income protection insurance and explore group risk benefits provided by your employer.
Organise Your Financial and Legal Documents
Organise important financial and legal documents in a centralized filing system for easy access. Keep documents such as matric certificates, transcripts, degrees, student loan contracts, tax-related information, employment contracts, and identification securely filed. Maintain both physical and digital copies, as needed.
Maximize Your Employment Opportunities
Understand your employment contract thoroughly, including details about salary, benefits, deductions, and group benefits. Review your payslips regularly to ensure accuracy.
Take advantage of opportunities offered by your employer to enhance your skills and further your qualifications. Committing to education and skill development becomes more challenging as personal responsibilities increase.
Embarking on your financial journey after repaying student loans requires careful planning and responsible financial habits.
By applying the above-mentioned tips you can set yourself up for long-term financial success as you transition into your professional journey. Remember, the key is to start early and be disciplined.
