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Getting your first salary is a huge achievement and calls for celebrations. You may feel tempted to spend it all, but has money management crossed your mind? If not, we are here to give you tips on how to start saving money from your first job.

how to start saving

Hena Mehta, CEO and founder of Basis, a platform for women to make informed money decisions, believes it is never too early to think about budgeting. “Starting the habit of saving right from your first pay cheque can help you reap compounded rewards through your life,” says Mehta. “If the idea of saving seems impossible, start saving just a day’s worth of income, and slowly work your way up to 20-30% of your monthly income. And always save before you spend,” she adds.

The time is now to develop a habit of saving and investment for wealth creation in the long run. “Like every other 20-year-old, I was more interested in living it up than ‘saving’. Investments — the very word would leave a dry taste in my mouth and make me feel older,” says Asheesh Chanda the CEO and founder of Kristal, a wealth management platform. “It’s only later that I realised the opportunity cost of this delay.” 

How to start saving and create a money management habit

As experts have suggested time and again, the mantra of investing is ‘the sooner you start, the better it is’. Early investment allows you to learn from any missteps since your risk profile will change as you grow older. If it is a mutual fund investment via SIP, you can even gain from the power of compounding. Here are five simple ways to save and invest:

Draft goals

The first and foremost thing is to draft a list of your financial goals that you’d like to achieve during your lifespan, starting from major expenses such as paying back an education loan, to saving up for a wedding, to buying a luxury car. “If you think you’ll have large financial goals to plan for shortly, start educating yourself on what you’ll need to do to achieve those goals. These could be goals such as higher education later, buying a car, travelling or starting a business,” says Mehta.

how to start saving


No, it isn’t boring. Fashion and beauty blogger Aanam Chashmawala swears by it. When you allocate your expenses and figure out how much you need, saving can become an automatic process. You can avoid non-essential expenses, prepare a realistic strategy to how much you can save each month, and achieve your financial goals. Mehta suggests saving before spending. “Money should be stashed away at the beginning of the month before you can pay your bills and cover other expenses”, she adds.

Creating an Emergency Fund

An emergency fund will equip you to effectively handle financial emergencies. The next step to financial planning is putting aside money into an emergency fund. You can increase the contribution to this fund steadily as your income increases. These can be in savings accounts or fixed deposits with a shorter tenure or even in liquid funds that are debt mutual funds.

Health Insurance and Term Insurance

After setting aside a part of your income for regular expenses and emergency fund, the next step is to buy health insurance for yourself. This makes sure that you are not drained of your savings in an unforeseen emergency like the current pandemic. Life insurance might not be necessary at this point in time if one doesn’t have dependents. Nonetheless, if you are in your first job, the assumption is that you are below the age of 30 or 25. In this case, if you can opt for term insurance, where the premium each month will be negligible, this will set you up for a benefit when you have dependents in the future. If you feel it is a strain on your income now, you can always opt for it a few years down the line.

how to start saving

Investment in Financial Instruments

It can be tricky to pick the right investment instrument from the myriad options available. You could consider mutual funds or take the help of a financial advisor. Since you are a  beginner and don’t have much knowledge about the working of financial markets, it could be better to stick to mutual funds rather than direct stock buying. What’s more, a SIP is light on your pocket (at Rs 500 or Rs 100) and helps you discipline investment.

A tax saving mutual fund is worth having in your portfolio. This will not just reduce your tax liability but build gradual wealth in the long run. One can also avail tax-benefits through investment in Equity Linked Savings Scheme (ELSS).  As investor patience is a key. Taking inadvertent risks in order to ‘increase’ or ‘hasten’ your returns may not be fruitful. If you’re worried about missing out, you can use a second portfolio for short-term investments or trade frequently,” says Chanda.

Making money isn’t boring, so your first job should only make you more interested in its management. Get going!

Anam Naqvi

Anam is an astute writer who aims to demystify personal finance and wealth management for the common man. She has written on geopolitics, economics and politics for the Economist Intelligence Unit before moving to personal finance content strategy. Her penchant for storytelling and conversation has resulted in a podcast about human stories called “Sapien Story”.