Financial management needs to start when you get any form of income. One regret that older people have is not making money work for them when they were still in their twenties because they could have been a lot wealthier.
Millennials often complain about being broke but most of the time we just need to be wiser with our money. Making time for financial education is the first step to creating wealth from a young age. Here are five tips to add to your life that will help you manage your money:
First, get your legal documentation as early as possible; your driver’s licence and passport. You open yourself up to easy moneymaking opportunities like au pairing, baby sitting or Uber driving if you have those documents. Also, you will pay a much lower premium when you apply for car insurance later. Because of your record of being a legal driver for a longer period, you are assumed to be a lower risk hence the adjusted premium.
Second, make a realistic monthly budget (as clichéd as it may sound) and stick to it. Download a budgeting or spending app like spending tracker or money manager to help you resist the urge of impulsive spending when you have night out with your friends. Your budget should include necessities, unplanned fun expenditures and money to save and invest.
Which leads to the third point: dedicate a portion of your income to a savings account or fixed deposit notice account temporarily while you look for investing opportunities you can afford like unit trusts, diversified index funds, annuities and shares. It’s okay start small. Eventually it becomes a high-return investment. You can look for these investment products online by researching companies’ products or outsource your friend who enjoys investment studies to help you.
4. Take risks
Take risks; learn about Forex and binary trading, sell cool clothing items, develop an app, do hair, create logos, do makeup, create a YouTube channel or a blog, become a social media influencer – basically, let your hobbies bring you extra income. There is opportunity for entrepreneurship everywhere.
5. Don’t do debt
Last, avoid debt! There is this misconception that one deliberately needs to get into debt to create a good credit record. However, you would then just be leading yourself to a life of debt. You don’t need a credit score if you can afford to buy everything with your own money.
That is another motivation for a savings account; to manage future big expenses like your first/next car and apartment deposit, your sister’s baby shower and your bae-cations. If you plan these expenses ahead you will not fall into the debt trap.
In essence, you need to learn financial discipline! Using money from your savings account to fill a pizza craving is just holding you back from creating your own wealth. Have a multiple income stream, make sure your money accumulates, avoid unnecessary expense, plan your future finances and enjoy getting rich.
• Sekhaolelo is the vice-chairperson of the Businesswomen’s Association’s Student Chapter at the University of Pretoria and a third-year actuarial sciences student.