Financial Planning for all ages
They say that wisdom comes with age, and that we only learn our lessons after we’ve figuratively bumped our heads – in other words, we learn best from experience. However, some mistakes are far better avoided. When it comes to financial planning, it’s vitally important to make the right decisions from day 1 of your working career.
Rule 1: Start the way you intend to continue.
Your first salary may seem like an enormous sum of money. You may feel quite rich and be tempted to splurge. After all, you’ve worked hard to get this far.
Consider the child who eats all his sweets immediately and ends up with a very sore stomach… and no more sweets for tomorrow. No doubt you have witnessed this, or even experienced it. The concept of delayed gratification is not something that only children struggle with. In our climate of ‘instant everything’, we are all used to getting what we want, when we want it, at the click of a button.
To encourage yourself to resist temptation, you can set financial goals for the next 6 months, the next year, and the next 5 or 8 or even 10 years. Here are a few ideas:
6 months: pay off credit card or store cards.
1 year: pay off car.
5 years: have an emergency account with 6 months’ salary saved.
8 years: pay off home.
10 years: be completely debt free.
Rule 2: Stop to think before you splurge.
Do you really need that new mobile, or outfit, or console? If yes, then have you found the item at the best price? If it’s on credit, have you obtained the most affordable payment plan? Do you know how much interest you will be paying on the debt?
True wealth is not about the car you drive or the clothes you wear or the gadgets you own. True wealth – and true peace of mind – is a result of living with as little debt as possible. It’s a rare and special and truly admirable individual who can proudly announce that they owe nothing to anybody.
Rule 3: Continue cultivating the good habits you started with.
If you budget and save on a monthly basis, eventually it will become second nature to do so. This process is easier to achieve if you have professional help. Just like you wouldn’t try to give yourself stitches if you are injured, so you shouldn’t jump into the world of finances and investments without a financial advisor to guide you, and even encourage you to do the right thing. Consider your financial advisor the way you would your trainer at gym, or your dietician – someone that you pay to help you become the best version of yourself.
And when you become that person, what a great feeling – even better than the child who saved his sweets so that there would be something to look forward to tomorrow.
“Experience is the name everyone gives to their mistakes.” – Oscar Wilde
The information in this communication is for information purposes and is not intended to be detailed advice described in the Financial Advisory and Intermediary Services Act. The fund, administrator and trustees cannot be held liable for damage or loss suffered as a result of any action that you take based on the contents of this communication.