I recently had the opportunity to present to a group of students during an online session, titled "Navigating my way to financial freedom"
When approached, I thought "being where I am today, what would I want a younger version of me to know, that would help me do better with my personal finances?"
Here goes the list of 10:
1. Learn everything there is to learn about money: what it is, how it works and how it 'makes the world go round'. Why banks love new graduates and professionals. Consume money material. Books, videos, articles, books, documentaries, podcasts.
2. Budget. Always have a budget.
It is boring and cumbersome, but it is important to have a budget, to know what money is coming in, and where it is going. You cannot change what you do not track and measure
3. Have an Emergency Fund
It's for unforeseen expenses. It will keep you away from getting into expensive debt. Take care that your needs do not suddenly become emergencies just because there is money lying around
4. Use credit responsibly.
As future graduates, financial service providers cannot wait to get a piece of your future earnings. Yes, you will likely need credit to buy the most expensive items you are likely to own in your life, e.g., a car, and a house. Even with your bank account, a standard cheque account is sufficient for 95 to 99% of your needs. Do not fall for the glamour attached to platinum, black and slightly curved cards
5. Invest! Invest! Invest!
As a student, you are investing. Do not stop investing. invest in yourself, your future dreams, your retirement, your financial freedom. the HOW matters less, but just keep investing. You will reap the rewards eventually.
6. Start early. Start Hard. Delay big ticket gratification.
Your earliest investments are usually the most rewarding over the long run. Do reward yourself. there are things you get the best of while you are still young, but take care not to do it in such a way that it sacrifices the long term
7. Live below your means.
Most money problems start with living beyond your means and believing your future income can afford it. Focus on increasing your income to save more and be able to afford things
8. Keep your options open.
Most people limit their range of choices and tie up money by rushing into buying cars, houses, and other durable assets. Having kids, starting a family are events that impact your range of choices. What if you get a lucrative job offer elsewhere? You may have to turn down the offer because of the comfort you have built. Flexibility is important.
9. Stay Invested.
Unfortunately, the downside of compounding is that the value of what you invest in is always growing at its fastest, right at the point you want to consume and enjoy the benefits. Therefore, income generating assets, and ones that generate income without your involvement, are important. Think 'forever dividends'...
10. Pay It Forward. It is your social investment. Teach and mentor someone or even better, your community. Accept that you will not benefit directly from these investments. The more people you can help, the better the world becomes
I hope you find this helpful…
This post was first published on 21 November 2021
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