It might be difficult, but young professionals should think about putting aside part of their monthly salary as savings. While some fields may provide higher salaries, the national average salary for fresh grads is around P20,000 a month.
Based on a popular method of saving, you should be saving around 20 percent of it (around P4,000) every month. This may be undoable for some, but if you manage to save that amount each month, it can take you one year to save almost P50,000. But what should you do with this money once you have it? Here are some options.
Start an Emergency Fund
You might be young and healthy, but all it takes is one accident, tragedy, or unexpected accident to put you in a financially precarious position. If you don’t have savings to soften the blow of this, you could enter financial hardship. So, now may be a good time to start building an emergency fund.
Ideally your emergency fund should be a separate bank account with at least three months’ worth of your salary. If you lose your source of income or experience an unexpected event like an unexpected disease or a physical injury, your emergency fund can soften the financial blow.
Start a Fund for Your Home
It’s unlikely you can independently afford buying your own property within your first year of working, but if you want to buy a house before you reach your late thirties, now is a good time to start. Having a savings fund for a down payment on your home can make you more financially stable when the time comes.
You most likely have to take out a loan with a government office like PAG-IBIG or opt for home loans with a private bank, but having funds ready for your property can help greatly because banks do not approve all home loans. Banks can evaluate your financial records and determine how likely (or unlikely) you are to pay off a loan on time. So, having a fund for your first home reduces the amount you need to borrow and understanding how to know your credit scorecan give you a better chance of getting a loan in the future.
Invest and Grow Your Money
Having P50,000 in your bank account opens the doors for plenty of possible investments. Choose from any of the following possible investment options:
- Unit investment trust funds
- Health insurance or variable universal life insurance
- Mutual funds
- Peer-to-peer lending or micro-lending
- Investing in the Philippine Stock Market
- Cryptocurrency
- Angel investing
While all these are good and legal options of investing, always do your research and know the risks of investing. Some forms of investments offer higher returns faster, but there’s a chance you could lose your investment. Other investments are much more secure, but the growth is much slower than you’d like.
Spend It on Yourself
We’re not talking about a P50,000 shopping spree in Greenbelt or flying abroad and renting out Disneyland for a day. Consider your P50,000 as an investment in your self-improvement and personal well-being. Find a productive way to improve yourself, something you couldn’t do before because of financial limitations.
Take an online class in cooking or go to language school and learn a language. Invest in a gym membership for a year and get into shape. Join a conference or get certified in a class to help you get a leg up in your chosen career path. Investing smartly doesn’t necessarily mean making a financial profit; it can also mean improving yourself, your health, and your skills.
There are many things you can do with P50,000 in the bank. As a young professional, the best thing to do with that money is to look long-term and see how much you can get out of that money. Do you save it for a rainy day, invest and watch it grow, or spend it to improve yourself?