You have truly entered the adult world once you start working full time.
This path brings its own responsibilities. You’ll have to make mature, adult decisions to go along with it. These decisions will affect you for the rest of your life, so think carefully and plan well. Your future will depend on it!
For a richer, brighter, happier future – start saving!
Where do I start?
Now! Start with your very first pay cheque or your very next pay cheque. The temptation to rush out and spend every single cent of your salary is very real, but, if you continue to do this every month you will end up broke, depressed and extremely stressed. The first thing to remember is:
Always spend less than you earn! This means living within your means’.
For financial peace of mind, experts say that at least 20% of your salary should go into some form of savings or a combination of different saving plans.
Why should I save?
Here are 4 reasons why you should save:
1. General Savings
Are you thinking of leaving home and getting your own place? You will need to pay a deposit (sometimes up to 2 months rent). You will need to save up for this You might need to buy some furniture, linen, crockery, cutlery or even a television to put in the apartment or house. You will need to save up for this.
2. Fun Savings
Do you dream of spoiling yourself with a fantastic holiday? Buying yourself a car? A motorbike? Or a designer coat? If you do, you will need to save up for this.
3. Emergency Savings
Bad, unexpected things happen in life and if you haven’t planned and saved up for it, it could stress you out and get you into financial trouble. There are many bad situations, but here are a few examples:
- You suddenly lose your job – no job is guaranteed!
- You’re in a car accident!
- The geyser in the house starts leaking!
- You have a burglary and they steal all your clothes, or more!
4. Life Savings
Life happens! Some things in life are guaranteed to cost you: your health, your family and your retirement. All these things need to be planned for right from the start, . . . right from your very first pay cheque.
- Your Health
You need to get medical insurance. You can do this by joining your company’s medical aid scheme or by joining a private scheme. If you have a medical emergency, go to hospital, or need medical treatment of any kind, your insurance should cover you and you won’t have to scramble to find the money.
NOTE: If you fall pregnant, your Medical Aid will also help you out. You must belong to a Medical Scheme for at least 3 months before falling pregnant though.
If you have children or other dependants, it would be wise to get some form of Life Insurance. This means if you die unexpectedly, from a long illness or accident, your dependents will be paid out a large sum of money to help them when you are gone.
- Your Family
If you have children and want them to have a good education – you will have to save up for this.
- A Home Of Your Own
If you want to eventually buy your own family home, you will have to save up for the deposit.
- Your Retirement
FACT: Inflation is a killer and you can’t run away from it! If you don’t plan for your retirement now, when you are young, you will end up old and poor. In the year 2050, you may pay up to R200 or more for a loaf of bread. At this rate, you may never be able to retire! There are many monthly payment options that you can pay into. Even a small amount per month – will help you when you are older. The more you save now, the more comfortable you will be later.
How do I start saving?
Get rid of any credit card debt you have, ASAP! Credit Card debt can and will cripple you!
FACT: The main reason for the current economic collapse of most countries, is due to their debt!
There really are only 4 things on this planet that should require credit or a loan:
- Buying a house
- Buying a car
- Starting a business
- Paying for studies.
The rest of your ‘stuff’ should not be bought on credit cards.
If you save up for the item, for example: new shoes, laptop, mobile phone or new curtains for the bedroom – you will suddenly realise that you are free from all the stress that rushes through you when you eventually have to find the money AND the added interest to pay off the debt on your credit card.
Added interest on credit card debt is insane! Sometimes you end up paying almost double for the item on credit than you would if you had saved up for it and paid for it in cash. Paying more for an item than it is worth does not make sense.
Try to avoid peer pressure to buy and collect fashionable items to make you feel like you are fitting in. Being your own person, with no debt, is far more advantageous.
Avoid credit at all costs! No Debt = Financial Freedom!
Work out what 20% of your salary is. This is your ‘savings’ plan. Discuss various savings options with your bank, a financial advisor or someone with banking experience. You can open a separate bank account, take out a retirement annuity, join your company’s retirement & medical aid schemes, buy unit trusts etc or create a combination of some of these options.
Plan a budget with the remainder of your salary. Work out what you spend your money on and how much you spend on each item. Keep a monthly record of your budget so you can see what you need, what you want and what you are wasting your money on. This will help you spend and save your hard-earned money wisely.
Work hard – Save now – Spend wisely – Live free – Have fun
‘The secret of financial success is to spend what you have left after saving … instead of saving what you have left after spending.’ – Jewel Diamond Ta
Pic credit: Pixabay