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Start a new savings account, pay it forward, and consider getting health insurance, among other tips. IMAGE: 123RF

'Yay! My First Paycheck Is In!' Here Are Some Responsible Ways To Spend It

Congratulations, you’ve made it to adulthood! That ecstatic feeling of knowing that the world is your oyster and the possibilities are limitless for you is something unique for every fresh grad out there.

So, when you get your first earnings, it’s understandable that you may be tempted to splurge it on a fancy pair of kicks, the latest PlayStation or a luxury bag – but what if we tell you there are more responsible ways to spend your first income and not have major ragrets later on?

Invest in an ETF

Taking the first step into investing can be daunting as you would not want to make any losses on that hard-earned money. While this is by no means risk-free, investing in an exchange-traded fund (ETF) that mirrors market indices such as the S&P 500 or our very own Straits Times Index (STI) is a sure-fire way to start an investment portfolio. Since an ETF tracks the entire market, you’ll be less susceptible to price volatility that typically appears with stocks of individual companies. Various investment experts (including the legendary Warren Buffett) swear by ETFs. Open a trading account, make your first investment and wait for it to appreciate over time.

Top up your parents’ CPF account (and save on tax!)

Give your parents a boost on their retirement nest egg and reap some tax savings at the same time – now that’s slaying life. It’s also sort of a symbolic gesture towards your parents by offering them a portion of your first paycheck (plus, your mum can no longer complain about how unfilial you are!). Gahmen say cash top-ups of up to $8,000 qualify for tax relief.

Pay it forward

Perhaps there’s a charitable cause that’s close to your heart but you were not in a position to contribute to previously. You can now consider paying it forward to the less fortunate and make a monetary contribution that is more impactful than any materialistic need.

Oh, and even though this shouldn’t be the reason you’re donating, donations do count towards tax relief as well. In fact, our Ministry of Finance has announced that the 2.5x multiplier on donations towards approved non-profit organisations will be extended till the end of 2026. Splash that cash on someone who needs it!

Get health insurance

Health insurance is kind of a non-negotiable as you embark on adulthood. While Singaporeans and PRs are covered under Medishield Life, a basic healthcare plan administered by the Central Provident Fund (CPF), there’s an annual claim limit of $150,000 which may not be sufficient for certain medical treatments.

Which is why the most responsible thing you can do as a young working professional is to secure additional health insurance cover for yourself through private insurers. You can do so by arranging to speak with a financial advisor who will advise you on the appropriate coverage for your needs.

Zhng your WFH setup

It looks like hybrid work arrangements are here to stay (yay!) so you’ll likely be spending a few days working from home if your job doesn’t require you to be physically present in the office. Trust me when I say that a good WFH setup should be at the top of your list or you’ll suffer from health consequences in the long run (stiff necks, anyone?).

The bare minimum should be a chair with sufficient lumbar support, an adjustable standing desk and a work monitor - but you can also consider splurging on items that will help boost your mood, such as essential oil candles or some desk plants.

Start a savings account

Use your first paycheck as the initial deposit for a brand new savings account. It can be an account that’s designated for various purposes – an emergency fund account, a travel fund or even a joint account with bae for your BTO.

Once you’ve gone through the initial hurdle of opening an account, automate monthly recurring transfers from the account to which your salary is credited so that saving up becomes effortless.

Pay off your student loans

While not all debt is bad, education loans are something that you would want to get off your balance sheet ASAP as you progress in life, and before other important milestones such as buying a house or marrying bae come along.

Most banks in Singapore allow early repayment of student loans, so remember to check the T&Cs of your loan agreement if it’s possible for you to do so. Bear in mind that the less you contribute towards your student loans each month, the more interest you’ll have to pay over the entire loan tenure and that’s just not living your best life.

So, try and set aside as much of your monthly paycheck as possible towards getting rid of those student loans – even if it means less bubble tea or fewer weekend getaways to Bali.

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