Getting your first job – be it a summer job or starting after graduation – is certainly an exciting event that many young people can hardly wait for. At the same time, it is certainly stressful, because when you sign a contract for the first time, you need to know how things work and concentrate to make sure you get paid at the end and that the pay you get is what was agreed. Managing personal finances can also be a new challenge. Triin Jalakas, Swedbank’s Head of Youth Banking, shares money wisdom tips to keep in mind in order to make your first salary even more enjoyable.
Sign a proper contract
The foundation of any employment is the contract, which sets out in black and white the rights and obligations of both the employee and the employer, the amount of pay and an explanation of the duties. Be aware that only a written employment contract will help secure your rights from day one, so do not be fooled by proposals to do it verbally, at a later date or after the job is done.
If you work full time, you must receive at least the minimum wage. The minimum wage this year is €654 per month gross (€3.86 per hour). The nature or complexity of the work, whether you do it by the hour or by commission, plays no role here. You are also entitled to paid leave in proportion to the time you have worked.
Employment of under 18s is also subject to an employment contract but requires the consent of both the child and his or her parent. There are specific rules for underaged workers that must be taken into account, for example, 7–16-year olds are only allowed to do light work and, depending on their age, for 3–7 hours a day and no more. In addition, a school-age person may not work for more than half the duration of the school holiday.
Start paying off your financial debts
It is great if you have no debts, but if you do, now is the time to start paying them back, be it student loans or loans from family or friends. It may not be possible to repay all your debts immediately but be sensible and write down all your financial commitments, for example in an Excel spreadsheet, and set yourself a budget so you have an overview of your income and expenses.
Now is the time to invest
Once you have reached adulthood, it is useful to start investing for the future. As a first step, set up a III pension pillar, which is supported by the state with an income tax credit: every year you get a 20% income tax refund on your contributions.
Investing in funds and securities is something worth looking into, because money simply loses value when it is stagnant. To make investing easier, we offer all of our 18-year-old customers at Swedbank shares in the Roburi fund and have set up an investment school with a range of podcasts, articles and videos to help you get started on your investment journey. It is safe to say that the sooner you start investing, the greater the chance that you will make more money out of it.
Create your own Peace of Mind Fund
Regardless of your age, it is a good idea to have savings. While piggy banks used to be a popular choice once upon a time, nowadays, especially if you use a debit card, it is advisable to make your savings automatic. For example, you can turn on the Money Saver application in your Swedbank account, which rounds each purchase to the nearest euro and transfers the difference between the purchase and the rounding to a separate savings account. This way, a considerable sum is collected almost unnoticeably, plus you can make separate transfers to the savings account or set up a direct debit. This money can be withdrawn at any time. Spending can be tracked with My budget.
You have worked hard to get your first job: you have looked for suitable jobs, applied for them, written motivation letters, gone to job interviews and earned your salary. Reward yourself for being diligent and planning your budget. While keeping an eye on spending and budgeting is sensible, excessive eagerness to save can lead to frustration. So, allow yourself to spend on fun things too. Be smart and take a look at Swedbank’s youth page, where you will find various partner offers and discounts.
Read more about starting a job, employment contracts and other important information on the Labour Inspectorate’s portal Working life. You can find more tips and advice on how to manage your money wisely in the Savings Diary group.
Prepared by Triin Jalakas Pool, Swedbank’s Head of Youth Banking.
Published on the youth information portal Teeviit in 2022.