Ziad Saad, Principal Investment Consultant at NMG Benefits
For many young professionals, a first salary feels like freedom. After years of studying, internships, limited bursaries or allowances, or part-time work, earning a full income can feel like permission to finally upgrade your lifestyle.
However, says Ziad Saad principal investment consultant at financial advisory firm NMG Benefits, the financial decisions you make during your first few years of working often have a far longer lifespan than you think.
“Your first salary can create an illusion that you have more money than you actually do,” he says. “The excitement of earning often leads to spur of the moment decisions that become monthly commitments which become years-long financial burdens.”
The first misstep is rarely one major purchase. More often, it’s a collection of smaller upgrades that feel reasonable in isolation. Moving from shared accommodation into your own place. Buying a car instead of using public transport. Upgrading your wardrobe and increasing your social spending to match your new professional environment.
As an example, consider moving from paying R7,000 rent for shared accommodation to R14,000 for a studio apartment. This additional R7,000 per month becomes R84,000 annually and roughly R350,000 over five year. Money that could have become an emergency fund, an investment portfolio, or deposit on a first home.
This is how ‘lifestyle inflation’ quietly takes hold. Fixed expenses rise, but income often takes years to catch up.
One of the simplest ways to avoid this, says Saad, is to follow a structured budgeting framework. He recommends the 50-30-20 approach: roughly 50% of income for essential expenses, 30% for lifestyle spending, and 20% for savings and future goals.
“You should absolutely enjoy your money,” he says. “But your future self also needs to be paid. The money you save now creates choices later.”
These choices matter because, often, the biggest financial mistake young professionals make is delaying their financial responsibilities. The reality, though, is that time is the single biggest advantage young earners have. “If you start investing early you’re not only investing for longer, you’re also giving compounding interest more time to work for you. Starting at age 25 can mean that your investment at age 60 is double what it would be if you start at 35,” says Saad.
In particular, South Africans cannot afford to ignore the retirement reality. The SASA Old Age Grant, which many think will fund their later years, stands at R2,315 per month in 2026, highlighting the importance of starting to save independently and as soon as possible.
Protection is another area where young professionals frequently underestimate risk.
Many assume they don’t need life insurance because they’re healthy, or they have no dependents or assets. While this might be true for life cover (which pays out a lump sum to your beneficiaries when you pass away) the truth is that unexpected health events can quickly derail the best-laid financial plan, making disability and dread disease cover, and medical scheme membership, critical.
Debt decisions also matter. Using credit cards to fund everyday expenses, withdrawing retirement savings early, or locking yourself into high-interest monthly commitments can reduce flexibility now and create pressure later.
When borrowing is necessary, planning becomes essential and, fortunately, young professionals have access to tools previous generations never had. Budgeting apps, tax calculators, investment platforms, and financial education tools like NMG’s free Smart Alec WhatsApp platform, make financial literacy more accessible than ever.
Saad acknowledges that it can be difficult to create a perfect plan from your very first payslip, but emphasises that starting in year one and staying consistent are key: “Financial stress compounds negatively and wealth compounds positively. Which one grows depends largely on the decisions you make when you first start earning.”
ENDS
