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First salaries usually go to treating yourself, friends or family to celebrate the start of your career. With the prospect of more paychecks to come, people usually spend away all their first salary and save, at best, very little. Not a lot think of what to prepare once they start earning to be financially secure.

The moment you start earning, first thing you should keep in mind is to be financially secure - being financially secure means not only getting a stable salary for the long run but also being able to prepare for unforeseen circumstances that might affect your income.

Here are the things you need to organize once you start working and before you start investing.

1. Obtain ample health insurance.
You shouldn't save to be able to pay hospital bills if you get sick. Instead, save to obtain medical insurance for the former is much more expensive than the latter. Also, any major health problem could easily drain all your wealth for treatment and recuperation and entail you to take a long leave of absence. Better be prepared if such happens. Not being able to prepare for such may lead to huge debts.

2. Obtain ample disability insurance.
Disability can also drain all your wealth, if not more than, then just as fast as a major health problem. Not to mention, depending on the gravity of disability, it can affect you and your income stream for the rest of your life. Note that a 35 year old person is 3 times more likely to be seriously disabled for at least 3 months than to die. A 50 year old person is 4 times more likely to be disabled than to die. And when it happens, it would be best that you were able to put into insurance an appropriate amount of money to offset the more or less permanent effect to your income.

3. Build up a cash cushion of 3-6 months worth of expenses or salary.

Don't go into investing just yet without having a cash cushion of 3-6 months. If any emergency happens that would entail you to shell out money on the spot, you at least have money that is ready to spare. Investments are not easily converted to cash and may take a week or more to do so. Not being able to pay emergency expenses may lead to accumulation of debts. This is different from acquiring health and disability insurance for not all emergencies are health related and covered by those insurances such as friends and family borrowing money, unexpected travel expenses from work, additional purchases due to special occasions, etc.

Building up a cash cushion also helps in case of sudden unemployment in which case you have money to spare while looking for a new job. Saving up for a cash cushion may take some time to gather. For more tips on how to save, click here. Once you have prepared these three, you're only a few steps away from being financially secure for life. The next step is to "invest your money" which a handful of articles regarding such will be posted on this blog very soon. 

4. Get a an insurance policy because it's cheaper when you are young.

You might think that since you are still single, you don't need life insurance. Get one anyways!

It's better to get an insurance policy while you are young and the cost if insurance is low. If you have plans of getting married and having children anyway, might as well prepare for it now. If you get insurance by the time you get a wife and kids, its more costly because insurance gets more expensive with age. If you get it now when you are 25, its way cheaper compared to if you get it when you are already married and expecting a child at 30.

Also, don't assume you have no dependents. You may not have children but if there is anybody you provide support to no matter how small, like contributing to your cousins education or contributing to your retired parents monthly expenses, then you definitely need insurance. With insurance, your ability to provide support to your loved ones, will not go to the grave with you.

There is a myriad of life insurance policies being offered now. One I suggest you get is insurance with an investment component generally called a variable life insurance. With this, a portion of what you pay goes to paying insurance and the other portion gets invested in mutual funds. So if you feel, insurance is an expense, try to know more about this product, as due to the investment component, this product can also build your savings. It can also serve as a source of retirement fund or inheritance to your family. As with all investments, the key component to getting bigger returns is time - the longer you leave your money in the investment, the more it can earn. So with this hybrid product, if you get it early, the more returns for you in the long run.


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