Bayport Blog
Financial literacy is extremely important when getting a new job
Published: May 3, 2021
Categories: Financial wellness, Workplace loans
Tags: Financial Literacy, Workplace financial wellness
Financial literacy for the newly employed
Your first, or even a new job, is an exciting thing. Understanding your fringe benefits can be equally exciting as it moves you towards long-term financial health.
The best time to establish a good habit is before you had gotten into a bad one. This is particularly true for the money habits you put in place when starting a job, whether it’s your first job or a new one.Know what you’re getting
The first thing to do is fully understand your salary package. Often, especially when you work in a large corporate company, there is a big difference between your salary – also called the total cost to the company – and your take-home pay. Deductions for the retirement fund, medical aid scheme, and group life insurance come into play, as well as income tax (PAYE on your payslip) and other mandatory deductions such as UIF and if you are a trade union member, your union fees. There might also be other company-specific deductions, such as a canteen card or a travel subsidy.Understanding your package is something you have to do even before you accept the job offer. For instance, if your new job is a lot further from home, your transport costs will increase and you might have to make different childcare arrangements because it is no longer possible to fetch your kids from school during your lunch hour. You have to make the sums to be sure that taking the job makes personal budget sense as much as career sense.
Once you have joined the company, make the most of the induction process to learn as much as you can about the fringe benefits. If there is no formal induction programme, make an appointment with a knowledgeable person in HR and discuss all your options and get answers to all your questions.
Let your benefits work for you
The big question to ask, is what small steps can you take today that will a huge impact on your financial wellness in future? Here are some points to consider when you do your financial planning:- Contribute as much as you can to the pension and provident fund. If you increase your contribution before you have even received your first salary, you will not miss the little extra that has gone towards your retirement. That is starting a good habit before it is necessary to break a bad one! In addition to giving yourself a better chance at a comfortable old age, you are being tax savvy because the money you pay into the pension fund reduces the amount on which you pay PAYE. You also get to make the most of compound interest by saving as much as you can over the longest possible period. Compound interest means that you earn interest on interest, and is a powerful tool for making your money grow. Learn more with our Know Your Money module.
- Make a deal with yourself to always save a portion of any bonus, increase or overtime you get. It is very easy for our expenses to grow along with our income – which is a bad habit. To break this habit, make it a matter of principle to keep a close eye on your expenses and to not allow them to swallow extra money. Learn more with our Grow Your Money module.
- Make sure that your employer deducts UIF from your salary. It is a legal requirement, but sadly some employers find ways around it. UIF is important as it gives you a safety net when you lose your job, as well as income when you are on maternity leave. UIF is a type of emergency fund for employees.
- Make full use of company-specific benefits, such as group life insurance, savings options through Payroll, further study assistance, employee support programmes, staff loans, or subsidised meals. Ask HR to explain these to you and work them into your financial planning. Learn more with our Your Money Plan module.
Most of us think that earning a fixed salary comes with little choice about what we do with our income and little power over our financial health. This is not true. Armed with financial literacy and the willingness to find out what your options are, you can start money habits today that will deliver powerful money solutions in future.