Financial tips for our youth

One of most important life skills you need throughout your life is financial knowledge. Unfortunately, personal finance is not in the school curriculum. This leaves many young adults without any knowledge about how best to manage money or stay out of debt. Here are some few tips to set you well on the path to financial security

Have a plan

Few good things happen by accident. Your future is not something that just happens; it is something that you can help to create. If you let life just happen to you, you will end up with whatever comes your way. By having a plan, and being focused, you have a better chance of achieving your goals. Write down your short, medium and long-term goals.

Create a budget

The concept of budgeting is often seen as boring but it really is a most effective way of keeping track of your expenses. A budget helps you see exactly where your money is going. Start by adding up the essentials, transportation, food and other important expenses. There is the tendency to eat out often, pick up take away meals, or to overspend on clothes and a lifestyle that you perhaps cannot afford just yet. This is the time to commit to save and invest for the future. The key is to live below your means and spend less than you earn.

Keep your debt under control

Use debt cautiously. It is better to borrow for things that have lasting value such as your personal development and education, or to buy property, rather than for clothes, gadgets and your lifestyle. If you are in debt, focus on paying off or at least reducing the debt with the highest interest first.

Building a solid credit history from your youth is important. Your employer, family and friends might lend you money from time to time. Be meticulous with repayment and don’t abuse this trust. It could be very important when you need to borrow more significantly for your business or other needs in the future. Borrowing is about character and credibility. Don’t abuse the privilege.

Start saving now

Things happen and it is always important to be able to be prepared for unexpected events and emergencies without having to beg or borrow. Job loss or other emergencies come out of the blue; ideally you should try to accumulate up to 6 months worth of your living expenses set aside in an easily accessible account.

Don’t wait until you earn “enough” before you start to save. It will never be enough; no matter how little you earn, save something; just get started, little by little. Even the smallest amounts add up over time. If you are consistent and disciplined, you will be surprised at how quickly the funds build up.

If you earn regular income, automating your savings via a direct debit will make it easier for you to save. The mantra “pay yourself first” involves treating savings as part of your non-negotiable monthly “expenses” that must be considered before any other expense. Set a realistic savings goal and start to save at least 10 – 20 percent of your income in a money market account or mutual fund.

Only a few of you are lucky enough to have parents that give you an allowance. Most are not so lucky. This means that you must look for ways to create income in order for you to save from monetizing your gifts and talents.

Invest in yourself

Each of you has Godgiven talents, and unique abilities. Identify your talents and skills and maximize them. True greatness often comes from developing a natural gift, from pursuing a specific dream, talent or goal. If you organize your life around your passion, it is quite extraordinary what you can achieve; but be practical.

You are your greatest asset. Invest in yourself. Personal development requires time, effort, drive, ambition, a burning desire, and a belief in yourself that you can learn, grow, and transform your life.

Personal development requires daily action. Make some time everyday, even just for 30 minutes a day to add value to your life. Read something of value, listen to something new, exercise, or just take a step back, and reflect on the lessons that life is teaching you.

The world is facing huge problems of youth unemployment, which are unlikely to be resolved even in the medium term. The finest degree is no guaranty for a job. Even whilst still in school or university, equip yourself with work experience and internships. Get some work experience under your belt. Even after your formal education, continue to learn constantly by attending seminars and webinars, and read widely.

Invest for the future

Your savings won’t be enough to meet your goals. To meet long-term goals, you need to invest. Start by saving regularly and then slowly build an investment portfolio of stocks, bonds, property etc. Mutual funds are an ideal place to start as they offer diversification and are professionally managed. The entry point for mutual funds is as low as N5,000 making it a good place to start. There is a magic that results from investing young. It is the surest way to long-term financial security.

Make an effort to learn about saving and investing. There is a plethora of information in the media, books, magazines, newspapers, seminars and the internet that will help guide you as you make financial decisions. Seek professional advice so that your own unique situation can be carefully considered and appropriate investment choices can be made for you.