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Financial Wellness From the First Paycheck: Steps to take in your twenties that can secure your financial future – Part 2

Managing your finances well is definitely not something that comes naturally to all of us but, by following a few simple guidelines, you can make sure that you create financial wellness for yourself right from the start of your earning career. We shared our first 10 steps to get started on securing your financial future here [URL to part 1 article] and conclude our Financial Wellness From the First Paycheck series with the next 10 tips:

  1. Live within your means

Learning to live within your means is not just about spending less than you earn. It’s about spending less than you earn after you’ve taken care of your future financial independence. If you’re spending in line with your earnings but are not investing money for your future, you are effectively spending your way into future poverty.

  1. Pay yourself first

Paying yourself first means managing your finances in such a way that you prioritise yourself – both your current and future self – in all decisions that you take. Costs of doing business as a young person include being able to produce a good credit score, showing proof of a well-managed bank account in your own name, being able to provide proof of earnings, being in good standing with Sars and having access to your FICA documents.

  1. Build your CV

Keep your CV continuously updated and be sure to include all certificates, qualification, and diplomas that you accumulate along the way. As you get caught up in your career, you may end up forgetting the various courses, workshops and training that you attend, so make a concerted effort to save all such records and use them to bolster your CV.

  1. Understand your money personality

Spend time understanding your relationship with money, how you feel about debt, what your money value system is, and what your spending habits are. Early identification of what drives your financial behaviour is hugely valuable and can help you identify problems before you potentially succumb to poor decision-making.

  1. Don’t become financially dependent on someone else

It is never ideal to become financially dependent on someone else or to rely on another person to fund your financial future, even if you believe that you and your partner or spouse have committed to being together forever. Not only can it result in a shift in relationship dynamics, but it can leave you financially vulnerable if the relationship comes to an end, either through death or divorce.

  1. Develop a financial plan

Ideally, find an independent financial advisor that can work with you to develop a malleable financial plan that can be changed and updated as your personal circumstances and finances change. Use the opportunity to list a set of short-, medium-, and long-term goals that you can visualise and use as the basis for starting your financial planning journey.

  1. Learn about investing

Be intentional about educating yourself about investing, investor behaviour and the various investment vehicles available to you so that you fully understand the power that compound interest holds on your financial future. Reading and remaining up-to-date with the investment industry will not only help you make appropriate investment choices but will also reduce your chances of falling for investment scams.

  1. File your income taxes

Ensure that you register as a taxpayer as soon as you begin earning over the tax threshold, and make sure that your details with Sars are 100% correct. Ideally, learn how to submit your own e-filing and be sure to file your returns on time, every time.

  1. Don’t invest too conservatively

With youth being on your side, be careful not to invest too conservatively if you’ve taken a long-term view on your investments. An investment portfolio that is too conservative and which doesn’t include sufficient growth assets will result in your invested capital losing value in real terms over time.

  1. Choose a partner that shares your money values

Money is the number one source of conflict in most relationships, so make sure you choose a partner that shares your money values and is committed to building a financial future together as team. Forming a partnership where one team member is chasing a different set of goals and has a conflicting value system when it comes to money is likely to be a constant source of conflict and stress in your relationship.

Contributed by MoneyWeb

Written by Gareth Collier – Crue Invest (Pty) Ltd

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