June 16th – Youth Day – presented an opportunity for young people to focus on their futures, reflecting on the past as a foundation to build upon.
Youth need to be empowered with a strong belief in themselves, that they can become whatever they dream and believe they can be. One vital pillar in their journey to successes is financial freedom; a stage in the future where one's savings can support one’s standard of living.
Learn from the 95% people who at age 65 don’t have enough savings for their retirement; or from the many that had to borrow money because they didn’t have a nest egg to fall back on when an unexpected financial disaster came their way.
If they had a chance to do it all over they would have saved so much more. They realised when it was too late, that they needed a much larger nest egg for their twilight years.
Young people can reach financial independence if they make financial commitments to themselves. Here are three ways to ensure you will get there.
Commit to living under your means instead of above them
Essentially, if you are borrowing money to make ends meet you are living above your means. This is exacerbated when you are paying off interest to institutions instead of saving for your future. There will be times where you will need to borrow money for a house or a car. However, the repayments on these, should be comfortably affordable, after you have set aside your savings.
Don’t be lulled into debt
You have been lead to believe that debt is a ‘must have’ because banks need a credit history before they can extend a loan to you.
This is true, but the smart way around this is to open a store card which generally offers interest free loans for the first six months. Using this free money to purchase something makes good financial sense if you stick to buying something that you really need and you can comfortably afford to pay off over the period.
It’s free cash and requires a disciplined commitment to paying the installments – on time – every time. You therefore build up the credit record without incurring costs.
If you commit to saving for yourself first at the beginning of every month, you begin the gratifying journey towards financial freedom.
The more you own and the less you owe the greater your sense of financial independence. Don’t be surprised at how your savings can grow over time through the magic of compounding.
By reinvesting the returns on your savings over time you participate in this financial phenomenon where the interest on interest over time boosts your savings into the stratosphere.
Young people have so much to look forward to. If you are wise you will take charge of your finances early in life avoiding the pitfalls experienced by the older generations before you.
Listen to the audio below for more information
Read more from Paul Roelofse at www.investforlife.co.za
This article first appeared on 702 : Youth…take charge of your financial destiny!