Someone once tweeted that being broke is childish and truth be told, living from hand to mouth actually gets tedious after a while.
How many of us have changed jobs and instead of preserving our pension fund, spent it all on paying off debts and splurging on an overseas holiday? After all, the future seems like a faraway concept that we might never even meet.
Often the assumption is that you’re still young and that there’ll be ample time to catch up with your savings. or rectify your bad financial habits. Most wealth experts actually advise that there’s no better time to start saving than when we receive that very first salary in our 20s.
The road to wealth building also requires a change of mindset, meaning old habits like buying expensive bottles of champagne in clubs before drawing up your monthly budget should fall by the wayside. The following guidelines will start you off on your journey to building wealth.
- Save more than you should: The general rule of thumb when it comes to saving is that one should put away at least 10% of their salary. Some of the most successful people save more than that to ensure they will be covered should it ‘rain’ unexpectedly. Some of the wealthiest never feel the need to show off. Instead they save more, find new investment opportunities and have sandwiches for supper instead of splurging on takeaways. Remember to start saving for retirement now and if you can, consult a financial advisor on how to build a few investment/income streams for your retirement.
- Root out the little things that eat away at your salary: For example a gym membership that you’re paying for but not using, bank charges for the ten times that you’ve withdrawn money in just two days, your phone bill, right down to that unnecessarily big tip you gave the waiter are just some of the bad financial habits that swallow up our salary without us even realising it. Also, go through your bank statements with a fine toothcomb and you’ll find many things that you’re paying for that you can definitely do without.
- Draw up a debt plan and stick to it: Draw up a list of those debts that give you sleepless nights, starting with the one with the highest interest rates right down to the lowest. Pay more than the minimum payment required on the debt at the top of your list. As you pay off one debt, repeat the cycle of paying in extra.
- Keep reminders of what you’re saving for everywhere: Often as our debts clear up and more money is available to us, the temptation to buy a new car or splurge on clothes or your social life arises. Don’t fall victim to this! Put up sticky notes or pictures on your desk or on the fridge at home to remind yourself what you’re saving for. One glance at these reminders will help you be at peace with your priorities.
- Investments are your best friend: The idea of investing in something that may only materialise in ten to twenty years may seem disheartening at first, but remember that it could set you up for a long time after you’ve retired. Property is a good one and so are equities, especially when you’re still young.
SOURCES: Entrepreneur, Forbes, LearnVest, US News, Investopedia