One of the trickiest parts of being a young adult (emphasis on the YOUNG), is figuring out how to make your (often-times little) money you have work for you.
I’m now 6 years into a professional career and let me tell you, it makes NO sense to me why one only gets paid 12 times in 365 days – it’s just a sick joke, if you ask me 😅. And it doesn’t get easier the older you get, judging from what I hear from my more mature inner circle.
I’m not a financial guru, I have not discovered the secret to ‘unlocking financial freedom’, but I have made some colossal and not-so-colossal financial faux-pas that I would hope the next person does not have to go through.So here goes my guide to making sense of your money:
1. Budget budget budget
Now I know you’re thinking, “but I don’t have that much anyway, what’s there to budget?”The best definition of budgeting I have ever heard is from Dave Ramsey goes “A budget is telling your money where to go instead of wondering where it went”, makes sense huh?
So the first step is being aware of what you spend your money on – rent, food, clothes, booze, etc.
You can start by itemizing everything. I mean everything (including the random chocolate on your way home, the midnight takeaway after a night out etc.). This will make you aware of your spending habits and then inform how to allocate your money. Track your spending for a few weeks and then sit down and divide up your spending so that it meets those needs. Start with the obvious & important things but do not forget the trivial stuff – those are usually the culprits of ‘too much month, not enough money’ syndrome.
2. Make saving compulsory
Just like paying rent, or medical aid, or your car – you need to allocate a portion of your income and/or allowance to some sort of saving. Even if it is 50 or 100 bucks a month – JUST SAVE SOMETHNG. Emergencies happen at the most inopportune time and you don’t want to owe the wrong kind of people (or bank). In case of no emergency you have a reward for yourself 👏🏾
3. Educate yourself
Know what things cost – I mean the real cost. For example, when I bought my first car I was prepared to pay for the monthly instalment on the financing agreement (ok, my first mistake was not buying a second hand skadonk that would cost me next to nothing until I could really afford the car of my dreams, but we’ll overlook that for now) – but I was never ready for the ridiculous quotes I had to endure for monthly insurance. Then there was the annual license disk renewal, service/maintenance and the topsy-turvy petrol costs. Shock of my life I tell you! So before making any significant purchase – research and ask questions. Google never hurts anyone.
4. Reward yourself sensibly
We live in an age of instant gratitude, and unfortunately, money does not work that way. Like all good things in life (reaching your goal weight, getting a degree or even growing your ‘fro’) – they take time. You can have everything you want, just not now. Get into the habit of setting goals that your money can achieve for you – adding to your shoe collection, going on a holiday, putting a deposit on your house. This will help you enjoy the little money you have to its fullest ✔️️
5. Stay in your lane
Don’t compare yourself to anyone – we all have different priorities and preferences (and pockets) so we spend our money differently. The fact that we may earn the same does not mean we spend the same, so go ahead and do you boo!
What have been your biggest financial faux-pas and what have they taught you?