5 Financial Tips for South Africans in Their 20s: Our GuideOct 22, 2020
There’s no denying that money is one of the most important things in this world. If you want to live a comfortable life, you have to be financially stable. That way, you can provide for your daily needs, start a family, and prepare for the future. However, that doesn’t mean that all it takes is to start working and earn a living. The truth is, managing your finances can get tricky along the way, but there are effective ways to set them on the right footing and direction.
If you’re in your 20s, here are five practical tips on how to handle your finances and lead yourself to financial liberation in the future:
1. Set a budget early on
When it comes to handling finances, the ultimate trick is to have a budget, where the rule of thumb is to only live within your means. If you’ve started working, it helps to monitor your income and deduct all your expenses on a monthly basis. Consider everything that you spend on, such as your rent, utility bills, debts, transport costs, and food consumption, among others. Ultimately, make budgeting a habit as this can pay off in the long run!
2. Have insurance for financial protection
Life is undoubtedly unpredictable, as you don’t know what might happen in the future. Think about the recent COVID-19 crisis and the possibility of you contracting the disease. If you aren’t careful, the chances are that you’ll get your health compromised, and without health insurance, imagine how much you’ll have to spend on all medical expenses and other costs! For this reason, getting yourself insured makes all the difference in your financial stability.
3. Improve your credit score
As early as now, you must start building your credit score, and one way to do so is to take on some debts and manage them well. This means paying on time and having no delinquent accounts. All your financial transactions will then be reflected in your credit report showing an excellent financial history and exceptional credit standing. However, when getting a loan, be sure to use the money for something worthwhile, such as getting a mortgage, investing in a car, or pursuing a business.
4. Create an emergency fund
As mentioned, you always have to come prepared for the uncertainty of the future. One way to do so is to start building an emergency fund as early as now. Unfortunately, insurance alone isn’t capable of covering all situations. If there is an unexpected circumstance, such as an accident or medical issue, you will still have your savings to finance and cope with it. The best course of action is to set aside five to ten percent of your monthly income for the emergency fund.
5. Begin saving up for the future
Keep in mind that your savings must be separated from your emergency fund. While your emergency fund covers all unexpected expenses, your savings serve as your financial allowance for any future financial pursuits. Think of this as a way of paying yourself. The sooner you start saving, the more fruits you’ll reap in the future. You’ll be amazed at how comfortable life can be if you start saving up early!
At this point, you now have a better idea of how to manage your finances even at a young age. All it takes is to have a budget, get insured, improve your credit score, build an emergency fund, and save up, as discussed above. With all these in mind, you’ll handle your finances better in the long run and financially prepare yourself for what lies ahead!
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