To be young and carefree, they say. But nothing comes close to understanding financial literacy at a younger age as it helps develop healthy lifelong financial habits. Making smart money moves as a young professional will benefit you significantly as you navigate financial freedom and wealth creation.
Ester Ochse, Product Head at FNB Integrated Advice, says: “The reality is that many young people tend to give in easily to instant gratification and live in the present when it comes to managing their monthly salaries and finances. This prevents them from making sound financial decisions as they continue to grow in their careers. As we commemorate Youth Month, we are urging our young professionals to have solid financial goals – whether short-term or long-term. It is important that they take a few steps when it comes to making simple or complex financial planning decisions.”
Ochse shares six smart money moves young professionals can consider when managing their finances:
First Smart Money Move: Budget and allocate your finances correctly. Prioritize your housing, monthly groceries, transport, data costs, savings, investments and the right insurance. Don’t always prioritize eating out and partying.
Second smart money move: As much as you might want to be the first to buy a nice car, don’t start out as a young pro to buy it. Rather, try building a small nest egg while building credit score and cultivating the discipline to manage your money effectively. If you really must buy a car, be careful about how much you can afford and don’t forget to factor in all other costs such as insurance, fuel and maintenance.
Third smart money move: It’s important to decipher between needs and wants, or necessary and unnecessary credit.
Fourth smart money move: Build a good credit score. Make sure you take a line of credit that you need and can afford. This also comes with responsibility and discipline as it will help in a better rate on a home loan and car finance. Also, make sure you don’t miss any debit orders as this will affect your credit score and wealth creation in the long run.
Fifth money smart move: Start building your emergency fund – work towards an income of 1 but ideally 3 months. This protects you against unforeseen expenses in the future.
Sixth Money Smart Move: Start setting aside a little bit for your long-term goals, whether it’s buying a home, advancing studies, or even retirement. With time on your side, you can really harness compound interest and the compounding effect.
“The money decisions we make when we are young set the tone for how we will manage our finances in the future. As a young professional, be very aware of the small or big financial decisions you make as they are crucial to helping you succeed in pursuing the best opportunities life has to offer,” concludes Ochse.
Smart money moves to earn as a youngster
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