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Published on October 22nd, 2018 | by Jones

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Your financial future: money and insurance tips for young professionals

So, you have finally entered the adult world. You are no longer a student and are joining the working world, but you may not have any idea how to be financially intelligent. There are certain steps you need to take to be completely financially independent, such as setting up a monthly budget, making sure you have debit orders in place for bills and taking out certain insurances.

Many recent graduates and workers do not consider certain aspects when planning for the future, such as looking at funeral plans or retrenchment insurance in case something should happen to them and their family left bereft. Below are some top money and insurance tips to follow on your journey as a young professional.  

Set up a monthly budget

You might think that your new salary will cover all of your expenses, but many young people who think this find themselves being wrong. Once you know the exact amount you will be receiving after tax has been taken off, you will be able to set up a monthly budget.

Your budget should include all necessary expenses, such as rent, petrol, groceries, utilities, credit and account debts and car maintenance. Once these have been taken off of your salary, then you can look at your disposable income. You could use this money to save towards a goal, such as a new car, or you could put it aside into a savings account for an emergency or in case you hit a bump in the road and need extra funds.

Create an emergency fund

Having an emergency fund is vital to any young professional. At this early stage in life, you are not established financially and will need to have some funding to fall back on in case of an emergency, such as needing new car tyres after an accident or having to replace your laptop due to theft.

Your emergency fund should be continued well into your professional life and if you do not use it until you retire, it can also be used as part of your retirement fund. Try to contribute at least R1000 into your emergency fund each month and make it part of your financial plan for the future. At the end of one year of contributing, you could have up to R12000 saved, so if you continue on this streak, your emergency fund will be able to help with the most expensive emergencies.

Find out about funeral cover

Having funeral cover might sound morbid at a young age, but starting it early will mean that you are covered even from a young age should something happen to you. This is especially helpful for young professionals who are the sole breadwinner of their family or who are taking care of their elderly parents or younger siblings.

Your savings might not be enough for your family to use to pay for your funeral, which is why you should look into funeral plans and find one that suits your needs. Funeral cover is used to pay for your funeral expenses, which help to save your family from extra stress when grieving.  You might think you are too young to think about your funeral, but it is best to be prepared ahead of time in this case.

Contribute to cover

Other than funeral plans, young professionals also need to sign up for medical aids and home and car insurance. While these might sound like more monthly expenses, they will certainly help you when disaster strikes. And it is important to remember that the longer you leave it to join a medical aid and take out insurance, the higher the premiums will be and you will be hit with late joiner fees too.

A hospital plan might be a better option for young professionals with starting salaries, as it will provide you with cover for if you ever need to go to the hospital but is more affordable than a comprehensive medical aid scheme. You should also consider gap cover to cover any potential shortfalls from hospital stays. For those who work dangerous jobs, life and funeral insurance are essential to consider.

Keep on top of your finances

While it is not wrong to spoil yourself every now and then, you should never take this mindset too far and end up in debt. This can lead to bad credit debts and having to claw your way out of account repayments.

Rather, start planning your financial future early by setting up a monthly budget, taking out a funeral plan and investing in an emergency fund. You will need to take out a medical aid or hospital plan and be sure to insure your car and household. By starting your financial plans early in life, you will be set to have a long and successful future.

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