So whether you deposited your first paycheque 10 or even 50 years ago, you need to read this, because more likely than not, you have a child, nephew, niece or grandchild whose future could be dramatically improved with good financial guidance…

As part of the Financial Planning Institute’s Financial Planning Week (25th-29th August), Veritas Wealth has been involved in delivering a number of educational talks to the public. One such talk is aimed at young people starting out in their careers.

We think the youth of this country are so very important and if we can get them to learn good financial habits early on in their careers, it will stand them (and South Africa) in good stead.

We encourage you to pass on this article, which offers simple financial tips specifically to those just starting out, to any young person that you know.

What’s the best financial advice for young people just starting to make money?
Have a healthy spending plan. Know what you spend your money on each month. The only way to get to grips with this is to record your expenses and then formulate a monthly budget.

Your income should rise faster than your lifestyle and that involves learning self control. Delayed gratification is important in developing good spending habits. Don’t expect to live it up straight away; the HDTV and surround sound will come in time.

Start saving NOW! A good trick here is to pay yourself first. This means you need to get the savings debit order to go off your account a day after you are paid each month. Don’t wait until the end of the month to see how much you can save. This never works!

Build an emergency savings fund. It will help you sleep better at night knowing you have money tucked away for a rainy day. Having that money stashed away is a great stress reliever the next time an unplanned expense arises.

Harness the power of compounding. Einstein once referred to it as the most powerful force in the world. You need to ensure that the compounding effect is working for you. The effect of growth on growth over a period of time is staggering. As a young person you have time on your side. Your two biggest allies are time and the power of compounding.

As you have a long working life ahead, you need to guard your wealth by way of insuring yourself against a catastrophe like disability or dread disease. You should also guard your health by way of ensuring you are on a good health/hospital plan.

As a young person you need to constantly invest in yourself and drive up your earnings potential. Most people believe that wealth is built through the management of money, but just as important is the management of another sort of capital — namely Human Capital. The education, training, skills and experience that an individual brings to the workplace require investment throughout one’s life to produce the highest possible returns.

Splashing out on a well deserved holiday or treating yourself every now and then is fine but buying a flashier car or bigger home is not always a good idea. Those aren’t just short-term spending decisions; those are long-term commitments that permanently commit you to higher spending in the future. US based financial planner Michael Kitces states: “If you make good prudent decisions about the big things like what you drive and where you live, it actually leaves a lot of flexibility to not need to sweat the small stuff at all.” We couldn’t agree more.

At Veritas, we’ve all been that twenty and thirty-something just getting started. And we know that you want to make good decisions, but you also want to feel that they are your own decisions, not something that is forced upon you by a parent or boss. Put into practice, the recommendations above will allow you to be who you really want to be, without the sudden and serious realisation at age 45 that you are not as well prepared for the future as you should be.

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