5 Steps To Take When Starting Your First Job

Your first job is a moment to celebrate your coming of age and to mark the beginning of your financial independence. No doubt, you may want to spend your first income celebrating this milestone. However, along with the enjoyment, you can take these steps essential to money management, tax-savings, and wealth creation.

Get a PAN Card

First and foremost, register for a PAN card. A PAN – Permanent Account Number – is a unique identity number allotted to every taxpayer by the Income Tax Department. It is needed for filing tax returns and to assign tax liabilities. A PAN is also essential for financial transactions such as receiving salary or professional fees, buying and selling of assets, opening or modifying bank accounts, investing, buying insurance and more.

Enroll for an Aadhaar Card

The Aadhaar is a 12-digit alphanumeric unique identity allotted to individuals. The Aadhaar database carries your biometric, demographic data. When you register for your Aadhaar ID, you share with the UIDAI such personal information as your name, photograph, age, cellphone number, residential address, etc. This document has gained importance greatly in the recent past. Today, Aadhaar has become key to accessing several financial benefits and services such as managing your EPFO account. Above all, you now need to link your PAN number with your Aadhaar.

Open a Salary Account

A salary account is a zero balance account opened with any bank wherein you can receive your salary. Your employer might arrange for an account opening or you, or you might have to do it on your own. You don’t need to maintain a minimum balance and you also enjoy other benefits such as a free debit card, reward points on using the card, higher withdrawal limits etc. You can also use your salary account to open fixed and recurring deposits, pay your bills, and open a linked service such as a demat account.

Start A Systematic Investment Plan

From the point of view of wealth creation, this would be one of the best steps you can take early in life. Whatever your salary may be, however modest it may be, you should consider saving and investing a percentage of it for your future needs. Mutual funds are an attractive avenue of investment. Systematic Investment Plans (SIPs) are an instrument to help you make disciplined Mutual Fund investments on a monthly basis. Start investing with amounts as small as Rs. 500 per month. If you invest Rs. 2000 in an equity Mutual Fund with a CAGR of 12%, you can raise Rs. 1.6 lakh in five years or Rs. 1.3 crore in 35 years. Start investing early for best results.

Buy Health Insurance

Another item you must consider adding to your kitty is a Health Insurance policy. Being young and healthy, you may not foresee poor health or a hospitalisation. However, illness and hospitalisation may happen to anyone at any age. You don’t want to be unprepared for such an event. Healthcare costs get higher every year, and a sudden hospitalisation could drain all your savings if you do not have health insurance. A health plan would also protect your family members and also help you save taxes under Section 80D.

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