If you are already planning to get your hands on that Prada wallet or that Hugo Boss dress shoes upon getting your first pay check, chances are that you will not be able to afford it. A common misconception is that you will have more to spend once you step into the working world. While that may be true if you are amongst those who are drawing a higher income than your peers, most people tend to forget that getting their first pay check comes with additional financial responsibilities as well.
The median starting pay for Polytechnic graduates is $2,200 and $3,360 for university graduates. After the 20% CPF deduction, you can expect your take home pay to be about $1980 and $2688 respectively.
Before you start to think of what you can buy with this amount of money, calculate how much you will be left with after paying for your monthly bills. Gone were the days when your parents would hand you your allowance for the month and all of it would be channelled to your food, entertainment, clothes. Now that you start “adulting”, you will have to start paying for these things that you took for granted in the past.
The average allowance a tertiary student receives ranges from $350 – $500 a month, excluding transport fares. For students who typically eat out, they might take up a part time job to supplement their allowance. By working 1 to 2 days part time a week, one can earn about $400 – $500 more and it makes it easier for them to finance their expenses. Typically, one will spend about $800 – $1000 a month including their shopping, transport and dining expenses.
For those who are more well to do, their parents might also gift their kids with a supplementary credit card so that they do not run out of money when they need it and might even end up paying the bills for them. This is why more and more millennials spend without being aware of their expenses and tend to spend more than they think. These are what you can expect to pay for after getting your first pay check (and also make you realize that you do not have as much disposable money than you actually think!)
Purchasing insurance that covers all the basics will set you back about $200 a month.
Besides a basic hospitalisation policy, one can expect to pay for their term policy, life insurance, or other insurance. This differs across individuals depending the types of insurance their parents bought. Having a full time job means that you will have to finance your insurance premiums. For many millennials, this is probably a “hidden cost” since they are not even aware of what types of insurance they have, let alone how much they will have to pay.
#2 Phone Plan
As a student, many enjoy the privilege of having their parents pay for their phone bills. On average, one spends at least $50 on a standard post paid plan. Most parents will pay for your phone bills and might only require you to top up if you exceed your basic monthly plan.
#3 Contribution to Household
Enough of receiving, it is time to give back to your parents. Upon getting your first pay cheque, be prepared to contribute to monthly household expenses.
Be it the groceries or the utilities, you now have a responsibility in paying for these expenses. A starting amount to give will be about $250 – $300 or about 15% of your net income. Of course, this differs from person to person and how their household structure is like.
#4 Transport Costs
Taking the public transport on a daily basis, one can expect to spend about $90 a month. Furthermore, this does not include those few occasions when you wake up late and end up taking an Uber/Grab to work instead.
#5 Lunch Expenses
In your University/Polytechnic days, you can choose whether you want to have lunch out or at home. Once you step into the working world, lunch with your colleagues becomes the routine. If you were to eat at the hawker centre everyday, spending an average of $3.50 – $4 on a meal will cost you $100 – $120 a month.
Stepping into the working world also means that you will have new expenditure to pay for such as new office clothes and Friday nights out with your colleagues. With all these expenses every month, you will be spending an additional $800.
After deducting $800 from your net income due to these expenses, an average First Jobber with a diploma will have around $1200 and degree holders will have around $1800 to work with every month. Taking into account that a portion of this amount will go into your savings, you will have lesser to spend that you actually think.