What Should I Do First with My First Paycheck as a Newcomer to the Workforce? (Looking for Personal Finance Advice)
This month is the first time I'm getting a paycheck, but now that it's actually hit my bank account, I don't know what to do. My parents just tell me to save, and on YouTube everyone talks about housing subscription accounts or ETFs, but I don't know what to prioritize...
Here's what I've heard from people around me:
1. Open a housing subscription savings account no matter what (you'll regret it later)
2. Keep about 3 months' worth of emergency funds in a parking account
3. After that, look into pension savings or an ISA
4. Never invest in stocks with borrowed money
Is this the right order? Or are there other priorities? My monthly salary is about 2.3 million KRW after tax. Any advice would be appreciated.
7 answers
Number 1 is an absolute must. I opened mine late at 27, and now I'm taking a huge hit on my housing subscription points 😭 This is the truth, so just open it right away.
Well, that order isn’t necessarily the right one. An emergency fund comes before a housing subscription. Putting a few tens of thousands of won into a subscription account is fine, but saying you should always lock money into the subscription first before you’ve built up a lump sum is a bit risky. If something suddenly comes up and you need money, breaking the subscription is the biggest waste.
If you're taking home 2.3 million won after tax, building a 3-month emergency fund should be your first priority. There are plenty of parking accounts with pretty decent interest rates these days. And really treat #4 like law and stick to it.
Got a source? YouTube just says provocative stuff for views, so it's risky. In your situation (office worker, 20s), the order is roughly right. But with an ISA, approach it differently depending on your income and goals.
Let me share one experience... I got my first paycheck, was super excited, and blew it all on clothes and electronics that month. A year later, there was nothing left in my bank account. After that, I switched to splitting my paycheck into different accounts by automatic transfer on payday, and it was way better. If I split it into 100,000 won for housing subscription savings, an emergency fund, and pension savings, I don’t touch it. And real debt? Absolutely not.
Housing subscription savings is a must, but the next priority depends on your situation. If you have plans to get married or move, it's better to increase your cash allocation rather than your pension, and if you're in your 20s, building up your seed money should come first.
Don't start by trying to learn about ETFs and all that—first build the habit of splitting up your bank account. That's the hardest and most important part.