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Money Talks: What to do with your first paycheck and how to avoid overspending?

Getting that first paycheck as a young adult can be exciting – and daunting. Is there a right way to manage your money? On a limited podcast series called Am I Adulting Right, CNA’s Elizabeth Neo gets some perspectives on what to do with your salary.

Money Talks: What to do with your first paycheck and how to avoid overspending?

File photo of a woman receiving a paycheck. (Photo: iStock)

SINGAPORE: Rita Goh, 29, remembers the thrill of getting her first credit card.

That big “adulting moment”, however, quickly went south. “The first few paychecks, especially with the credit card, were very quickly squandered away," said Goh.

At first, I was really embarrassed by that. But looking around at my friends and peers, I learnt that it’s a pretty common rookie mistake … I quickly learnt that I had to track my spending more carefully.

Managing personal finances is a lifelong journey, and the financial habits people develop in their 20s make a difference to how secure they are in the future – a key takeaway from this week's episode of the Money Talks podcast.

One easy way to develop a good habit? Automating your savings, says Gregory Van, CEO of digital wealth platform Endowus.

“When we don't take deliberate moves to automate things, we won't be saving that little bit every month. That will build up into a lot (over time), which you will end up using for maybe your first house down payment, or maybe have an experience that you've been dreaming of for a long time,” says Van.

Endowus CEO Gregory Van discussing personal finance hacks for young adults with Money Talks podcast host Elizabeth Neo.

Here are the highlights from the conversation:


Van: "My first paycheck probably came in summer internships where I didn't get paid much at all … I probably got like a thousand dollars for an entire summer and I think a lot of that ended up going to food." 

Goh: "My first paycheck out of college was S$2,800. The first thing I spent on was a trip."


Van: "You have to be strict on yourself … So when you get that bonus, don't go on three lavish vacations and eat omakase (Japanese fine dining) five days a week. That’s not good planning. I think you just need to remain disciplined and you can achieve your goals at the same time."

"You need to invest very consistently and know what you are investing in. There are only two things in investing that can really hurt you. One is concentration and one is leverage. And oftentimes in Asia, people are overly concentrated and overly leveraged."


Van: "You need to segment your money into buckets based on different goals that you have in your life. The first bucket that everyone should save towards is four months of expenses. And then I would move on to the most important near-term goal you have, (which could be to) buy an apartment in the next five years. And then you have retirement."


Goh: "You shouldn't scrimp on hobbies and you shouldn't just work 16 hours a day or like six days a week just for life to pass by. I feel hobbies and passions are exactly what makes life, life. And it kind of justifies why I go to work every day sometimes."

Van: "Money is the means to having experiences. So you need to spend within your means, save up, invest some money. Buying that drum kit (or experience) is definitely not something you should be ashamed of."

For the full conversation, listen to this episode on managing your first paycheck.

Source: CNA/jq


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