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Financial lessons to learn by age 30

Learning how to manage your finances at a young age may seem hard but it will set the foundation for your future finances. Saving for your retirement may seem daunting t at a young age but to enjoy your retirement, you need to start saving while you are young. Here are some good goals to set to learn how to mange your finances by the age of 30.

  1. Stick to your budget

Many young adults play around with the idea of a budget and may have one, but they seldom stick to it. It’s time to start sticking to your budget and allocating exactly where your money goes each month. If you decide to spend R100 a month on coffee, do not spend over R100 a month on coffee. Even better, make coffee at home 😊

The idea of a budget is to control where your money goes so that you can make good decisions with your hard-earned cash. Keep in mind that every rand you put away here and there will add up eventually. Sticking to a budget does not mean you can’t spend money on shopping or a holiday, it just means that you need to limit theses things to fit into your budget. This way, you will avoid getting distracted from your savings goals.  Knowing your spending habits will also help you decide where you can cut back on expenses each month.

Read our article about how to start a budget if you need help getting started. Don’t spend all your money each month

The wealthiest people did not get there by spending all their paycheck every month. They got their wealth by spending their money modestly. It has been shown that self-made billionaires own modest housing and averagely priced cars. While the people who drove fancy cars and live in expensive housing are drowning in debt, according to Thomas J. Stanley’s book “The Millionaire Next Door.”

A good guideline is to spend up to 90% of your paycheck and then save the other 10%. You can do this by setting up a debit order, so the money comes off automatically from your paycheck each month. If you don’t have the money in the first place, you won’t miss it. This monthly saving will add up for your retirement or an emergency fund. As you get used to this you can start to increase the amount you put away each month.  (sign up to find our more about our simple savings solution to get you started)

  1. Set financial goals

Sit down ad set yourself realistic financial goals, really think about what you want to work towards. Decide what age you want to achieve them by. You are more likely to achieve your goals if you write them down.

For example, if you want to go on holiday, start saving towards it. Make it happen. Do research into how much it will cost you and what you must do to get there. Whatever your financial goal, you need to sit down and come up with a game plan as to how you are going to achieve it

  1. Establish an emergency fund

An emergency fund is vital to your finances. Having an emergency fund means that in times of emergency, you will not have to dip into your savings or take out a loan. Read our article about how to start an emergency fund for more.

If you are thinking about starting an emergency fund then have a look at the upcoming Meerkat savings solution that can help you to reach your goals.

  1. Manage your debt

By the age of 30, you may find you are  funding elements of your lifestyle using debt You should asses your debt situation and figure out how you are going to pay it off so that you can better your finances and have more money to yourself each month. The truth is you don’t need to spend your whole life paying off your debt.

There are many methods to start paying off your debts. If you find that you are over-indebted (i.e more than half of your salary is going towards paying off debt you can consider debt review). This process will protect your assets while you pay off your debt. It will also allow you to pay less by reducing your interest rates. If you are in debt and need help, contact us today.

Use these tips today and take control of your finances.

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