A step‑by‑step guide to investing your first salary

We all have big, big plans for our first salary, which for fresh grads on their first job sounds like a lot of money. But if you’re like most people, then the more you earn, the more you may end up spending, because finally you can buy that cool gadget that you’ve been eyeing for so long, or those fresh pair of kicks, or eat at this pricey but trendy restaurant. And then at some point your parents will expect you to chip in with the utility bills, the rent, your younger siblings’ education, existing family debt, and so on. Poof! There goes your first salary.

That just seems to be the thing with our generation. We have big, big dreams according to our Google search trends. Topping Filipino millennial search trends are arts and entertainment; hobbies and leisure; travel and tourism; computers; family and community; vehicles; fitness; apparel; finances and of course, mobile phones. We want to spend, spend, spend, but we can only earn, earn, earn so much before we succumb to our physical limits.

Self‑styled “40‑year‑old millennial,” Sun Life Asset Management Company, Inc. (SLAMCI) bank and alternate distribution channels head Gerald Bautista, who is also the fund advisor of Matteo Guidicelli, shared some of his pro tips on how to make our first salary grow to fit our growing needs during the Sinag Students Summit on October 26 at the Pan Pacific Hotel, Manila.

How? Through investing, of course.

“It’s easy to get money from our ATM, it’s so accessible,” Bautista said in his explanation on how investment can make our money grow. “But if you have a piggy bank like a mutual fund that’s meant to achieve your life goals, then you let it stay there and you only break it when you actually need it.”

An example he gave was that of a 23‑year‑old whose goal is to visit Japan. If he invested ₱5,000, and then diligently invested ₱1,000 every month (which is equivalent to saving approximately ₱35 daily), assuming that there’s a 10% interest in his earnings throughout, then he would have ₱47,000 by age 26. By age 28, it could get him a return of ₱83,000, enough money for a trip to Japan.

“These are certain habits that you should do. You can’t just invest money one time,” Bautista said. “You have to save regularly… If you don’t put money in regularly, your ₱5,000 after a few years will just amount to ₱7,000.”

“The most important thing to remember is you have to make investing very consistent. For example, the 5‑3‑5 formula,” he further explained, 5‑3‑5 being the “magic number” to growing an investment fund. The 5‑3‑5 formula essentially boils down to investing ₱5,000 initially, and investing ₱3,000 monthly. The financial expert swears that you’re sure to see a growth in your investments in five months.

Another thing that’s important: start early. The longer your money is invested, the more your savings grow.

And what better time to start investing than when you earn that sweet, sweet first paycheck, when you have all the money of a working member of society with less of the responsibility. Bautista shared this simple investment breakdown to cover how you could ideally invest your first paycheck and still have money left over for all the fun things you want to do.

Art Erka Capili Inciong

Let’s do the math, shall we?

Let’s assume that you got a job with a starting salary of ₱15,000 and the Department of Finance’s Tax Reform Program has passed, which means that you fall under the bracket that won’t have to pay personal income tax and will be able to take home all of your money.

Under Bautista’s breakdown, you will be investing ₱1,500 in a mutual fund for long‑term goals for your dream car or wedding, another ₱1,500 for your travel plans, and ₱3,000 to your future home. Another ₱1,500 will be invested in insurance, in case something happens to you. A mere ₱750 goes to another mutual fund for short‑term needs, in case you want to switch jobs, or (God forbid) you get fired. That leaves you ₱6,750 cash in your ATM for your personal enjoyment!

And now that you’ve started, all you have to do is top‑up regularly, at smaller increments if you want. Then you can enjoy what you earned while having money saved up for the future at the same time.

“Indecision is the thief of opportunity. I don’t want you guys to procrastinate,” Bautista said, quoting the late American entrepreneur Jim Rohn. “Once you get your first salary, you really have to be mindful and start investing. These will fund your life goals five or ten years down the road.”

“You have to make sure that money is working for you through proper investment means.”