Saving from the start and investing in a retirement policy early can save you from future troubles. Picture: Shutterstock
I wish I had known earlier how the financial decisions I make today will affect tomorrow. If I had, I could have avoided many costly mistakes in my youth.
From experience, here are some tips to share with the youth to prevent them from making similar mistakes.
Say no to instant gratification and peer pressure
When I was younger, many of my friends wanted to impress women and each other by buying expensive things that they actually couldn’t afford. This resulted in them taking out multiple credit and store cards when they first started working. It was great for a while because they could buy whatever they wanted, whenever they wanted, but a year later, all their earnings were going towards paying off their debt.
While it might be tempting now to take out credit and store cards, you’ll be paying the price later on – sometimes even for several years. You need to ask yourself if whether the people you are trying to impress are worth the pain.
Find a financial advisor
It’s important to have a financial advisor from the minute you start earning money so that you can make better decisions on what to do with it (and don’t end up drowning in debt). Many people are reluctant to speak to a financial advisor because they are worried that their money will be taken from them. However, a financial advisor will work with you to come up with a financial plan that can be reviewed on an ongoing basis and adjusted in line with your needs. If you allow yourself to engage with a financial advisor at this early stage, you can make informed financial decisions that can pay off handsomely in future.
Plan for retirement right away
While retirement may seem a long way off, you need to plan for it as soon as you start working so you can harness the power of compound interest and be set up for a life of leisure. Those who don’t save early often feel caught off guard when retirement age starts creeping up on them and, while they might try put away large sums of money at the last minute, they won’t have the benefit of compound interest and may even compromise their current quality of life by doing so. Your financial advisor can guide you on the best policy to get, based on what you can afford at the moment.
Get life insurance early
Taking out life cover at a young age comes with a number of advantages – you’re in good health, it’s cheaper and you get much higher cover. If you leave it too late, by the time you apply your premiums will be more expensive and you won’t be as healthy.