While many end up in high-end joints with their friends for some bites and drinks, other visits boutiques to change their wardrobes. This is but the beginning of money problems unless soon addressed.

BT spoke to Jackline Mugo, a certified investment adviser, about the smartest things to do with your money when you start earning.

Before throwing an expensive bash, thinking of a vacation or going on a shopping spree, consider these money moves.

1. Seek financial management tutorials

According to Ms Mugo, you can start seeking for financial advice long before you have the cheque in hand or the money hands in your bank account. This, she says, will give you a better guide and knowledge on how to prioritise your spendings, doing your budgets and starting early savings.

“ Many people who lack financial management skills do not actually know what to do with their cash. As a result, they might end up squandering the whole amount and more especially when they know that they are on payroll,” she says. Your money will always wait for you so take time and understand how to manage it before making a move.

2. Settle you debts

First jobs come with their own challenges. For example, lack of fare to your workplace can compel you to borrow from friends or relatives with the hope of paying with your expected salary. Before you do this, you need to do your maths and know the amount of debt you can pay with ease.

“ Never go for debts that will take you long to pay. When you get your money, prioritise clearing all the debts so that you can have easy in planning with your cash,” she says.

Paying debts on time also increases your credit rating among friends and relatives when you get back to them for more debts. Do not go for debts if you can survive on minimal finance.

3. Start an emergency fund

This might seem to be a long term plan, yes, but remember sometimes life takes its own course. You can lose your job anytime, get sick or even find your house broken into and everything gone. It is important, according to Mugo, to have a safety net just in case. Ideally, you’ll never need this money — and it’s important to keep your hands off it for anything other than a real emergency.

Having multiple accounts is one of the tricks that will help you keep off from this money until real emergency strikes. Always consider putting it in a high-yield savings account, which offers a higher interest rate,” she says.

4. Set specific saving goals for future expenses

Once you start earning, expect bigger expenses in future, such as buying a car, home or educating your kids. The earlier you start setting aside money for these expenses, the better.

” The most effective way to save for these big-ticket items is to have a certain amount of money automatically deducted from your bank account and sent to a savings account, says Mugo

“Do it on the same day you get paid. You’ll never even see that money and it’s a really easy way to make sure you stay consistent with your savings.”

5. Get the insurance you need

Many people have the habit of evading insurance covers with a feeling that they can make monthly savings. However, according to Mugo, this might turn against you at the end of the day.

Buying the right insurance policy for your situation is critical to a healthy financial life. “Try and shop around for the best policy and start your contributions as early as possible,” she says.

Insurance, according to Mugo, is a very important part of our daily lives and as such, should be given a key priority. “ Never let it wait if you can pay it,” she adds.

6. Start some side hustle

Does this look unrealistic to you just because it is your first pay? If it does, then look at it positively. There are simple businesses that one can start with as low as Ksh 500.

“ Walk around, identify what is lacking in your area, you can capitalise on that to help you in other areas,” she adds. Starting a small business is also important because you will no longer rely on your salary alone since once it establishes itself, you can easily settle your daily expenses with the profit and invest your salary in other venture.

Credit: Cavin Odhiambo reporter with Business Today

So, make it your goal to form new habits that will take your financial life to the next level.

From learning a new skill every day to hitting the gym regularly, habit takes away the one singular thing that prevents us from getting things done — resistance. With good habits, we no longer resist. We just do it.

You can quickly attain financial freedom by positively channeling the power of habit toward how you treat money. But, first, let’s look at the steps to developing new habits.

Author James Clear breaks down habit formation into three steps (the three R’s): reminder (what triggers the behavior); routine (the habit itself) and reward (what you get from this behavior). In order for a habit to stick, it must follow the three R’s rule. By practicing some of the following habits, your reward will be a more financially rewarding lifestyle.

1. Be clear about your financial goals.

One habit you need to develop is clarity toward your goals. Your goals can shape your attitude toward whatever you do and put you in the right perspective about your financial life. Lack of clarity is equivalent to having no goals at all.

“Clarity about your money goals is the first step towards getting your finances right,” Yasir Khan, founder and chief editor at WealthKept.com, says. “Getting your finances right — being able to prioritize what you do with your money — can only be achieved by clearing the unnecessary obligations out of the way.”

Developing a habit of being clear about your financial goals will also create a sense of focus, which is the psychological effect of setting goals. Let’s assume your aim is to start your own business this year. You’ll outline how much funding is required to do that, and how much you want to raise yourself.

2. Stop associating guilt with money.

One habit which keeps a person from growing financially is how he or she feels about money. A lot of people feel guilty, which is why they often find it difficult to discuss the financial terms of a business relationship before starting one.

Develop a positive attitude toward money this year by overcoming any guilt you feel about money.

3. Seek more income sources.

The best way to improve your financial life this year is to use your free time to earn an extra income. Start by looking at areas where you can fill a need and earn extra money in the process.

And make converting your spare time into income opportunities a habit. You could freelance for businesses or help people with things they can’t do themselves. Khan said he was able to start two small businesses apart from his main job when he noticed he could use his free time to help others. Now that his side businesses are growing, he hires people to help him run the business.

4. Make clearing your debts a priority

One of the biggest hindrances to financial growth is debt. The problem is that debt keeps compounding, making it your most expensive liability. Start paying off your debt with each paycheck you earn. By forming this habit, you could become debt-free by the end of 2017.

5. Save to secure your future

Make saving a habit in 2017. The more you save, the more you’ll have when you retire.

6. Separate friendship from business

Underscore the purpose of your relationship with others, and make it a habit to always separate money from friendship and friendship from business.

A lot of relationships have gone to ruin because of money. In 2017, be careful when forming business relationships. Make sure you know enough about someone before entering into such a relationship. Do background checks before a first meeting. Entering into a relationship with the wrong person could be costly or devastating to your financial life.

7. See money as a means, not an end

Many people get the notion of money very wrong. Because we see money as the end goal, it affects our orientation about it. See money as what it is and what it’s meant to be — a tool, a means to an end. What the end is for every one of us may be different. For most, it might be happiness, while for others it’s simply a comfortable lifestyle.

8. Seek advice from financial consultants

Develop a habit of seeking advice before making any major financial decision. This will help you avoid making any decision you’ll end up regretting. When you make a habit of seeking financial advice, you’ll be less likely to take financial risks that could hurt your lifestyle.

9. Decide against impulse buying

Make it a habit to spend only on things you need. Cut back on impulse buying by weighing your options before making any purchase. When you buy on impulse, you only gain a temporary sense of satisfaction. Once this instant gratification has worn off, what you’re left with is a shrunken purse and a tinge of regret, or buyer’s remorse.

10. Live below your means

Many wealthy individuals mastered the habit of living below their means, even before they became hugely successful. A lot of wealthy individuals prefer to live a frugal lifestyle.

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