Top 5 Financial tips you would give your younger self
Start saving as soon as possible
Don’t wait to start putting money aside for the future. It really does pay to save and the earlier you start the better.
You might not be able to save much at the beginning, but small and regular contributions to your wealth can build into a significant amount over time.
Your savings can pay for important events later in your life: such as your retirement, children’s education, house purchase or even your daughter’s wedding day!
Have AN EMERGENCY FUND
Sometimes life can take an unexpected turn and leave you facing financial hardship.
It’s therefore practical to have a ‘rainy day’ fund to help handle these stressful situations - and even if you don’t run into trouble these funds could still count towards your long-term savings.
Opening a money market savings account will protect your money from inflation, and having it out of your immediate reach means you won’t be able to dip into these savings on a whim – even if you’re tempted to.
PLAN FOR YOUR FUTURE
Thinking about where you might be later in life can be daunting, but your future self will thank you for the consideration.
Precise pinpointing what you want to have – like being married with kids in 5 years - may create unnecessary pressure on yourself.
Instead, make baseline assumptions of what you aspire to have – like owning a home - and see how much you need to earn and save in order to hit that goal.
In particular, one thing you must prepare for is to be financially independent in old age. It might seem like a long way off but it’s never too soon to start contributing towards this massive future expense.
HAVE A BUDGET
Having a budget helps you keep a handle on the money you spend, but it’s especially important if you find your outgoings outstripping your income.
A regular review of expenses should highlight where you can cut costs, and whilst essential expenses - like rent, utility bills and food – can’t be sacrificed, you can try to keep them as low as possible.
You’ll also find manageable changes – like cutting down on takeaways or online shopping – can have a big impact in the long run. With hard work and dedication, you will in time have sufficient funds to live without the pressure of spiraling into debt.
DON’T OVER-INDULGE ON LUXURIES
Spoiling yourself is acceptable as long as you are spending within your means. One of the best financial habits you can adopt is discipline because this helps you avoid buying every luxury that catches your eye.
There are some obvious tell-tale signs that you might be overspending, including having little to no savings, carrying a balance on your credit card from month to month or having a negative net worth. If you want to avoid living from pay cheque to pay cheque then never spend more than what you earn.
KEEP DEBT TO A MINIMUM - AND ALWAYS PAY IT OFF asap
You can categorise what you owe into good debt and bad debt.
Debt take out to make an investment that could improve your long-term wealth is seen as ‘good debt’. This might be a loan to study at university, or a mortgage to buy your house.
On the other hand, purchases of things that go down in value - such as cars, furniture, designer clothing and phones - are bad debt.
Both types of debt limit your financial freedom, so keep debt to a minimum and work out a payment plan to pay it off as soon as possible.
