10 Financial Saving Tips For a New Employee

12 January 2023
8 min read

Congratulations! Your efforts have been rewarded. Your first job is a respectable one. What actions can you take right away to improve your financial future? Starting a new job always has a special feeling to it. Being financially independent and able to stand on one's own two feet is empowering.

The fact that great financial independence also comes with significant financial responsibility is what matters most. For new earners, getting carried away is very simple. What do you do in this situation, then?

Personal financial planning for savings gives you a systematic plan for achieving your objectives without financial difficulties once you land a job. A practical financial goal is crucial if you are a salaried employee. It ensures that achieving financial independence and ensuring the future of your loved ones are balanced.

As a result, this blog will help you if you are new to personal financial planning and uncertain about how to get started, especially when you have secured a job for the first time.

Here are ten suggestions to assist you in putting money aside for the future.

10 Financial Saving Tips for New Employees

We typically save money for two primary purposes: purchasing an expensive item we've always wanted or having financial security in the future.

In the not-too-distant future, if you are a young employee or have just begun your career, you will probably need reserve funds and credits to replace the pay if you decide to resign.

The following are some pointers for saving money:

  1. Create a Monthly Budget

Making a budget is the most crucial money management advice for all new earners. Although it may sound very sappy and every day, the significance of this straightforward habit cannot be overstated. You can use various budgeting methods and strategies to determine your monthly expenses and savings.

A budget is a fundamental financial statement that lists the anticipated receipts and outlays for a given period. The budget is typically created monthly to estimate the costs of maintaining the household for our purposes. In this regard, our mothers can teach us how to make a budget. However, it is incredible how precisely and effectively our mothers put together a budget for the monthly costs.

Creating a budget is beneficial throughout one's life and not just at the beginning of one's career.

  1. Invest in Life as Well as Health Insurance

This is likely one of the most significant investments every person will eventually need to make. This should be one of the first investments made by those just starting. A life insurance policy offers your loved ones a safety net in terms of money and a sense of financial security and peace of mind.

One must do adequate research before selecting an insurance policy, carefully read and comprehend the terms and conditions, look up the lock-in period, and not withhold any information from the insurance companies. Term insurance is top-rated and advised these days.

There are numerous life insurance plans, though, so one must be careful when selecting one. Furthermore, Health Insurance should also be on your list because it is crucial, can help you shortly, and is an essential requirement of modern life.

  1. Debt Management

According to reports, more than half of millennials are in some long-term debt, particularly those just starting in the workforce. Home loans, auto loans, personal loans, and student loans are a few common loan types. Unfortunately, we occasionally take on more debt than we can handle. This might result from a desire to keep up a particular way of life. Therefore, new employees should exercise caution when making unnecessary or wasteful purchases.

Credit cards frequently cause us to spend more than we can afford. Additionally, new hires must exercise caution when using credit cards. Therefore, they should make purchases in line with their capacity for cash flow.

  1. Improve Your Salary Structure by Planning It Well

Most of us prioritize Cost to the Company above all else (CTC). While CTC is undoubtedly one of the most crucial facets of our work, one must also be aware of how taxes are applied. Did you know that you could easily save money on taxes by modifying and adjusting your salary structure? Additionally, this and much more are possible without altering the overall CTC. Interesting, right?

Let us examine how this is feasible: Basic pay, House Rent Allowance (HRA), Dearness Allowance (DA), and Special Allowance generally make up the essential component that accounts for most of your salary. All employees, especially those just starting, need to be aware that every element—aside from the HRA component—is fully taxable.

Reducing the total basic pay and adjusting it as perks or long-term benefits could be a simple and logical way to lower tax obligations.

Additionally, new hires must know that higher basic pay will result in higher HRA, DA, and provident fund contributions. This is so because these elements are typically calculated as a certain percentage of the basic salary and are linked to it.

A higher basic wage means the associated higher deferred compensation (DA) will be taxable, while the PF contributions are tax-free, lowering your take-home pay.

In conclusion, new hires can reduce their tax burden by modifying their salary arrangements to be more tax-efficient. In addition, taxes can be saved by thoroughly understanding the tax code and its regulations.

  1. Maximize Your Tax Savings

New workers and earners need to understand how our nation's taxation system operates. The government taxes our hard-earned income to a certain extent. In this regard, it is critical to comprehend how investing can help us earn returns while saving money on taxes.

Surprised? Yes, this is not only feasible but also entirely legal. Knowing that each person is qualified for a deduction of ₹150,000 under section 80C of the Income Tax Act is crucial for everyone and new employees. A class of Mutual Funds called Equity-Linked Savings Scheme (ELSS) aims to promote long-term investment in the equity asset class. Investing in ELSS funds is among the best ways to save on taxes.

Tax deductions for ELSS investments are allowed up to ₹150,000. However, this investment tool is unique because it has a three-year lock-in period. As a result, any investment made in an ELSS scheme cannot be withdrawn before a minimum of three years has passed.

  1. Invest in Public Provident Funds (PPFs)

A Public Provident Fund is a type of EEE (exempt-exempt-exempt) savings product that the government backs. This implies that your investment amount, interest income, and withdrawals are all tax-free. The yearly minimum deposit is ₹500. A recent change removed the limitation that PPF investments could only be made 12 times annually.

So long as you do not invest more than ₹1.50 lakh, you can invest as often as you like during a given financial year. The PPF account currently offers an interest rate of 7.9% per year. A loan facility is available four years after a PPF account is opened, but withdrawals are not permitted until six years have passed.

  1. Put Your Money in Fixed Deposits

"Let's make a Fixed Deposit." This phrase has probably been repeated several times if you are an Indian. So the fact that our friends and family are investing in fixed deposits is not surprising.

A fixed deposit is a financial product offered by banks or non-bank financial institutions that gives investors a higher interest rate than typical savings account up until the specified maturity date. Furthermore, there is a good chance that we will be encouraged to invest in an FD as soon as we receive our first paycheck or reach a certain level of savings.

A five-year lock-in period is included with FDs. They provide annual returns of roughly 8% and, thus, are a must for people who have just started earning a stable income.

  1. Create an Emergency Fund

The decision to save is directly related to establishing an emergency fund. Effective personal financial planning calls for setting aside money for unplanned expenses. While going with the flow is acceptable, you should always have extra cash in case unforeseen expenses arise.

A medical emergency, robbery, fire, or a natural disaster that results in significant financial losses are a few examples of life events that might necessitate a lump-sum fund. New earners should set aside 3-6 months' expenses in a bank account to start an emergency fund. This fund needs to be started as soon as possible in one's career.

  1. Sensible Investing and Saving Are The Key

Business owners and investment experts constantly emphasize the value of investments over savings. This is because investing, as opposed to simply saving, is frequently a better option when you land your first job and have no obligations or dependents.

You must learn to multiply your funds by investing in mutual funds, foreign exchange, gold, real estate, or even the stock market to stay ahead financially. The long-term benefits of setting investment goals and making early investments can be significant.

  1. Build a Retirement Corpus

The retirement strategy of a person is influenced by their age and projected monthly expenses. According to financial experts, one should aim for a retirement accumulation of 20 times their annual income. This dated maxim takes into account income rather than expenses. Therefore, drawing your retirement plan by your current costs and scenarios is essential while considering the importance of retirement planning.

The Pension Fund, Regulatory Development Authority, also offers a new pension plan for the public, private, and unorganized sectors. NPS provides a great way to begin accumulating a retirement corpus with an impressive selection of eight fund managers and the choice of investment method.


When you are young or a new employee, saving money can seem like an improbable task. It is simple to view your paycheck as a means of getting by month to month rather than as a means of saving for the future and making ends meet. However, keeping a small amount of money each month can have a considerably impact.

We hope that these ten money-saving suggestions and financial tips for young adults and salaried employees can get you started on the road to future economic success.

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