“It’s never too late to learn,” says Galileo Capital Financial Advisor Warren Ingram.
Before you begin your journey to building wealth and finding financial independence, it’s important you understand a few basics.
Credit cards often cause financial self-destruction
The best way to improve and keep a good credit record is to demonstrate that you are a responsible individual. Timely payment is the easiest way to improve your credit status. “Credit cards cost a lot so pay it off everything month,” says Ingram. “By not paying it off every month you are making the shareholders of the bank very rich.
“You have to be really cautious before you take a credit card because it is not an investment. It is a great tool if used well, but it can be a weapon of financial self-destruction.”
Did you know?
- Some credit card companies charge a transaction fee to convert your cash to a foreign currency.
- If you are a long-time credit card holder with a high interest rate, request that bank or credit card company give you a lower interest rate or ask them to drop the annual fee. Credit card companies want your business and will often do what they can to keep you.
- You can deny a raise to your credit limit.
- Your credit card issuer can close your account anytime, for any reason, even if your account is in good standing. This can happen to customers who incur no fees and pay their balance every month, simply because their account may not generate enough profit for the card company.
We often postpone our savings, with a hope that we will have enough tomorrow, thereby making it even harder than it is. Start small, but start today.
“Learning how to manage a little money now will help you successfully manage a lot of money later,” says Ingram. “The greatest time to make mistakes is when you don’t have a lot of money.”
Holding a mindset that allows you to be respectful of, yet emotionally detached from money will help you make better decisions in every area of life. “Do something that will give you a skill instead of chasing money. If you have a choice; don’t go for just for the salary but also look out for a job in which you can grow personally. It’s more important to find a dynamic company that is willing to teach and promote you.”
Saving vs. Investing
In order to build wealth you need to understand that saving and investing, although related, are not the same things. “It’s important to understand the difference between saving and investing,” says Ingram. “It’s a great thing to save but, once you have saved, it’s important to understand how to make that money grow.”
It may seem difficult but every financially successful person had to start small by spending less than they earn and investing the difference.
“I think when you are in your 20s you need to educate yourself about money. Nowadays there are many products that help young people understand money and finance. There are saving packages for young people and also information on the importance of saving.” - Sibongile Mathambo (Warden; 29 years old)
“Investing is when you buy assets such as property, bonds, shares and those types of things. Saving means you’re not spending, but putting money away in reserve somewhere such as a bank.” - Arnold Mlandeli (Politics student; 23 years old)
“Well, the sooner we learn financial responsibility the better.” - Zuko Mbangiswano (Entrepreneur; 25 years old)
Article by Sithandwa Ngwetsheni
(Edited by Kabous le Roux)
This article first appeared on 702 : Healthy money habits to form while you’re still young