As the cost of living increases and a culture characterised by poor saving habits takes hold, exercising smart financial habits from an early age has become essential.
With low salaries and growing responsibilities, stepping into the adult world can be a big shock for young people. Not many people are comfortable talking about money but the need for early financial planning is a necessity – and it doesn’t have to be a drag.
If you’re a young person starting out in the working world or simply looking to make smart saving decisions, here are seven tips to get you started:
Don’t wait until debt becomes a problem to have the necessary financial chats. Get into the habit of saving as early as possible.
Your credit score assesses your ability to repay loaned money based on your previous bill payments and financial history. When the time comes for you to buy a car or secure a home loan, your credit score will be of the utmost importance. So while it might seem like a great idea to dodge your rent for a few weeks in favour of a fun Friday night out, it may affect your future significantly. Pay your bills on time and use online credit score checkers to make sure you are staying in good stead.
Working within a budget is possibly one of the most significant financial skills for any young person to master and is something that many adults struggle with all their lives. Rather than shelling out money for new goodies or clothes, make it a habit to work within a set monthly budget. This will strengthen the understanding and appreciation of the value of money.
Managing your money can be an overwhelming task, particularly when faced with expenses and responsibilities you have never had before. Don’t be afraid to ask for help from a financial adviser – preferably one who isn’t tied to any commissions – and start putting aside small amounts that can accrue interest. Even if it is a few hundred rand each month, you will be amazed at how fast that money can grow.
When you are finally making money of your own, it can be tempting to splash out on “well-deserved” luxuries. Remember, taking out a loan or overspending on a credit card unnecessary can have a huge effect on your finances for many years. Where possible, try to work within your budget and keep saving. You will reap the benefits a few years down the line.
Financial planning is not something many of us think about until we are confronted with the reality of bills, debt and bonds. Getting into the habit of making smart saving decisions is a no-brainer – it’s never too early (or too late). Having financial freedom will not only put your mind at ease but also allow you to plan for unforeseen circumstances and live life your way.
Source: Sunday Times