The sad truth about your money and income is that no one else is going to take an interest in it. And that’s why it’s your responsibility. It’s essential that you really learn the ins and outs of your personal finances when you’re just starting out. Here are some of the things you’re going to need to know.
How are you going to earn money? It’s important that you have more than one source of income. A side job is essential in getting ahead financially. This might include working a casual job like waitressing on the weekend or starting a business while you’re working your day job. It’ll be tough at first but your future self will thank you.
Which bank are you going to make use of? There are many different banks in South Africa. They all have their own pros and cons. It’s important that you find the one that’s going to be the most beneficial to you. It needs to be low cost, offer good interest rates and have a decent reward system. If you can find a bank that’s willing to give you money in the form of rewards, take it.
Will you do your own taxes? As a young person, there's no reason why you can’t complete your own tax returns. Taxes tend to get more complicated as life becomes more complicated. Think having kids, multiple properties, business expenses and capital gains. As a young person with a relatively simple life, you can manage the return yourself without needing to pay a professional to do it for you.
Do you have an emergency fund? This is an essential step in securing your financial future. It’s recommended you have at least six months of expenses saved up. It depends on your risk tolerance and financial security. This is the money which will be available to you should you lose your job, are in a car accident or suffer a health crisis. If you didn’t have this fund, you’d likely have to pay out the expenses on your credit card. And you would not want to do that.
Are you going to start investing soon? Investing is key in your journey to financial success. This is largely because of the power of compound interest, which is the continual adding of interest to your money. Basically, it’s the act of your money working to earn money so that one day you don’t have to.
Are you insured? You can insure just about everything. Health, house, home contents, car and income. The reality is that insurance could save you from times of financial distress. imagine you’re in a serious car accident or are diagnosed with a health condition. How would you cope financially in this time? While you’re at it, make sure to research funeral cover in South Africa to be certain about these costs.
Are you spending on credit? Never spend money on a credit card. Spending on credit is borrowing money to spend money. And that’s just silly. If you’re already in debt, you need to know exactly how much you owe, what the interest rates are and how you plan to pay it off. And if you’re not in debt, keep it that way. Promise yourself that you’ll never allow that to happen to you.
Do you have a plan for your money? It’s not your salary that’s going to make you wealthy. It’s your spending habits. That’s why you need to be intentional with your money. You need a budget. It’s as simple as that. You need to know what money is coming in and how you plan on spending it.
Do you know what you want from your money? What are the dreams you have for your life? You’ve earned your money and worked hard for it. So, you should be able to spend it on the things that matter to you. If you value experience, spend it on travelling the world. If You value a healthy lifestyle, spend it on a gym membership and quality ingredients for delicious, nutritious meals. It’s essential that you use your money on the things you will most appreciate.