New to the Workforce? Where Should Your Financial Planning Begin?

For people just starting their careers, a salary is the first generous pool of spare money they have ever received.
But if you spend it lavishly, wanting to fully feel "the reward for labor earned by sweat," even a salary that seemed like a lot of money will melt away like snow in no time.
On the other hand, if you save carefully and manage it wisely, it will become a solid source of support later on.
"How much can I possibly save from a tiny salary..." is nothing more than an excuse.
Just cutting back on things you do without thinking in daily life — one night out drinking, a pack of cigarettes, a cup of Americano — is enough to build up funds.

With payday coming up, what should you start doing now?

1. Check your spending habits with a household budget book
When you use a credit card, you can sometimes lose track of how much you spent this month and whether you spent a little or a lot.
In some cases, there isn't enough money in your bank account on the card payment date, and you end up paying unexpected late fees.
As the old saying goes, "Spending matters more than earning" — you need to carefully track the money going out to understand your spending tendencies and which items you can cut back on.
These days, you can conveniently check your spending habits using smartphone budgeting apps

2. Split your bank accounts by use and purpose
Not all bank accounts are the same.
You should divide them by purpose — a salary account, a savings account, a fixed-expense account, a spending account, an emergency-fund account, and so on — and manage each according to its purpose.
The savings account, meant for building a lump sum over the long term, is more efficient if you subdivide it by goal, such as wedding funds or travel funds.
Use the fixed-expense account for student loan payments, utility bills and various taxes, the spending account for pocket money and living expenses, and the emergency-fund account for family-event expenses and emergency savings.
Another thing to remember is that money left only in the bank does not grow.
In a low-interest-rate era like today, you should invest wisely by dividing your money into safe assets and investments.
It is wise to put part of your money into deposits and installment savings and part into investments aiming for medium risk, medium return.

3. Spend in ways that benefit your year-end tax settlement
The year-end tax settlement, known as the "13th-month salary," pays back more the harder you prepare for it.
However, since the system refunds overpaid taxes and collects any unpaid taxes, you should remember that it can also result in an unexpected expense.
That is why it's best to keep good track of your personal deductions as well as credit card, debit card and cash receipt usage, and to carefully understand the income deduction and tax credit items.
For items that require separate receipts — such as donations, eyeglass purchases and education expenses — make it a habit to keep documentation proving each expense as it occurs.

4. Reduce money leaks with tax-saving products
In a low-interest-rate era like today, putting money in the bank can be seen as being more for 'storing money' than 'growing money.'
That is also why direct investment, represented by stocks, and indirect investment, represented by funds, have become essentials of asset management.
Without investing, it is by no means easy to achieve your expected returns.
As growing money has become harder, tax-saving products are drawing attention from people who want to at least stop money from leaking out.
In particular, bond investing has become much more popular over the past few years, and it is well worth studying why the wealthy love bonds.
Bonds have many advantages even compared with deposits and installment savings.

5. Put into practice an investment approach based on your life goals
Whether in studying, work or saving money, people with goals and people without them inevitably get different results.
Managing your salary is no different.
When setting goals, rather than making vague plans, you should spell out the period, purpose and amount in detail.
"20,000,000 won for bond investment within 1 year"
"100,000,000 won for wedding funds within 5 years"
"300,000,000 won for buying a home within 10 years" are examples.
Once you've made a plan, you should actively look into which investment methods to combine to reach your goal.
You need to divide your money into short-term and long-term funds and use various investment methods — deposits and installment savings, funds, stocks, bonds and more — where they fit best.

6. Rules of asset management
1) Rule of 72: 72 ÷ rate of return (interest rate) = time to double your assets
- The time it takes for the assets you have now to double
2) Wealth Index Rule : (net assets X 10) ÷ (age X total annual income) = wealth index
- Net assets : (total assets, financial/non-financial, etc.) - total liabilities
- A wealth index of 1 or higher means you have managed your finances well,
and a wealth index of 2 or higher means you are likely to become wealthy
3) Investment Tendency Rule : 100 - age = aggressive investment ratio
- The rule that you should raise your aggressive investment ratio when young
and allocate more to safe assets as you get older