It’s always a good idea to get a headstart on your financial planning. Never mind when your first pay cheque hits your bank account, starting to put together a financial plan even when you’re in your teens is a good idea! Being young and carefree is a great thing, because you’re exposed to great opportunities and choices to shape your future for the better. Your 20s are also filled with crucial financial decisive moments, and it’s then that you should start looking to sign up with a Life Insurance Company. As a young adult, you may not see them at first look. We teamed up with 1Life to talk about some of the financial mistakes to avoid in your 20s.
Taking on too many unnecessary debts
Having a great job in your prime means that you’re more vulnerable to shopping on credit. This isn’t a bad thing, but it may lead to excessive shopping and piling up your house with goods that you probably won’t need two months down the line. Items such as clothes, groceries should be bought cash – out of your salary. Try your best to save the remaining money you have and do not be lured into opening store credit to get the latest trends available. By not spending money on silly things, I ended up with a nice little nest egg that I once used to refurnish our flat with. It’s a good idea to skip those random trips to the mall, and rather save up for a few more important things, like new furniture for your bachelor pad or perhaps even an overseas trip. By focusing on your savings plan, rather than racking up credit card bills on miscellaneous stuff, you’ll be setting yourself up for a comfortable future.
Saving a lot and investing none
It is good to save your money, but saving and not having a solid plan on what you are saving for can be a very dangerous practice. It’s best to save money in categories, including long and short-term savings. With short-term savings, you’ll be saving your money specifically for something that you want, like a laptop, so you’ll have a definitive goal for your hard work. Long-term savings plans would include important things like a retirement plan. You may think it is still early for that, but you have compound interest on your side, which is very important in the long run. So, while saving is important, it is crucial that you allocate your savings to something substantial. Idle money bears the danger of being spent on useless things that may be fun at first, but will cost you down the line. So be careful! During my 20s, I signed up for a life insurance policy that has become an important part of my financial life, because I know that, should anything unexpected happen, my family (that I hadn’t even dreamt of back then!) could be taken care of.
1Life believes that financial education has the power to change the lives of all South Africans. Find out more on our blog. This post is sponsored by 1Life Insurance to educate you on South African investment strategies. Visit them to get reliable information on life insurance online and get a quote for Life Cover online.