By Nimi Akinkugbe
One of the most important skills you need throughout your life is financial knowledge. Unfortunately, personal finance is not in the school curriculum. This leaves many young adults without any knowledge about how best to manage money or stay out of debt. Here are some tips to set you well on the path to financial security:
Have a plan
Few good things happen by accident. Your future is not something that just happens; it is something that you create. If you let life just happen to you, you will end up with whatever comes your way. By having a plan and being focused, you have a better chance of achieving your goals. Write down your short, medium, and long-term goals.
Create a budget
The concept of budgeting is often seen as boring, but it really is the most effective way of keeping track of your expenses. A budget helps you see exactly where your money is going. Start by adding up the essentials – transportation, food, and other important expenses. There is the tendency to eat out often, pick up take away meals, or to overspend on clothes and a lifestyle that you perhaps cannot afford just yet. This is the time to commit to save and invest for the future. The key is to live below your means and spend less than you earn.
Keep your debt under control
Use debt cautiously. It is better to borrow for things that have lasting value, such as your personal development and education, or to buy property, rather than for clothes, gadgets, and your lifestyle. If you are in debt, focus on paying off or at least reducing the debt with the highest interest first.
Building a solid credit history from your youth is important. Your employer, family, and friends might lend you money from time to time. Be meticulous with repayment and don’t abuse this trust. It could be very important when you need to borrow more significantly for your business or other needs in the future. Borrowing is about character and credibility. Don’t abuse the privilege.
Start saving now
Things happen, and it is always important to be able to be prepared for unexpected events and emergencies without having to beg or borrow. Job loss or other emergencies come out of the blue. Ideally, you should try to accumulate up to 6 months’ worth of your living expenses set aside in an easily accessible account.
Don’t wait until you earn ‘enough’ before you start to save. It will never be enough. No matter how little you earn, save something, just get started little by little. Even the smallest amounts add up over time. If you are consistent and disciplined, you will be surprised at how quickly the funds build up.
If you earn a regular income, automating your savings via direct debit will make it easier for you to save. The mantra “pay yourself first” involves treating savings as part of your non-negotiable monthly ‘expenses’ that must be considered before any other expense. Set a realistic savings goal and start to save at least 10 – 20 percent of your income in a money market account or mutual fund.
Only a few of you are lucky enough to have parents that give you an allowance. Most are not so lucky. This means that you must look for ways to create income in order for you to save from monetizing your gifts and talents.
Invest in yourself
Each of you has God-given talents and unique abilities. Identify your talents and skills and maximize them. True greatness often comes from developing a natural gift, from pursuing a specific dream, talent, or goal. If you organize your life around your passion, it is quite extraordinary what you can achieve—but be practical.
You are your greatest asset, so invest in yourself. Personal development requires time, effort, drive, ambition, a burning desire, and a belief in yourself that you can learn, grow, and transform your life. Personal development requires daily action. Make some time every day, even just for 30 minutes a day to add value to your life. Read something of value, listen to something new, exercise, or just take a step back and reflect on the lessons that life is teaching you.
The world is facing huge problems of youth unemployment, which are unlikely to be resolved even in the medium term. The finest degree is no guaranty for a job. Even whilst still in school or university, equip yourself with work experience and internships. Get some work experience under your belt. Even after your formal education, continue to learn constantly by attending seminars and webinars, and read widely.
Make investments for the future
Your savings won’t be enough to meet your goals. To meet long-term goals, you need to invest. Start by saving regularly, and then slowly build an investment portfolio of stocks, bonds, property, etc. Mutual funds are an ideal place to start as they offer diversification and are professionally managed. The entry point for mutual funds is as low as ₦5,000, making it a good place to start. There is a magic that results from investing young. It is the surest way to long-term financial security.
Make an effort to learn about saving and investing. There is a plethora of information in the media, books, magazines, newspapers, seminars, and the internet that will help guide you as you make financial decisions. Seek professional advice so that your own unique situation can be carefully considered and appropriate investment choices can be made for you.
Protect your wealth
To be sure that all the assets that you have built are protected, include insurance in your financial plan – your car, your personal effects, your health, and your life. Don’t wait for something to happen and then wish you were insured.
Health is wealth
As we all know, the COVID-19 pandemic has changed all our lives. Don’t allow a sense of fatigue and complacency to build. The virus is still here, so continue to follow the protocols meticulously. Wear your mask, wash your hands frequently, use a sanitizer, keep your social distance, and avoid crowds.
Beyond COVID-19, the world is riddled with negative news that are always in your face. Protect your physical and mental health. Give your body the best chance with the right diet, exercise, and rest. If you feel overwhelmed, don’t shy away from speaking up. Depression and suicide are real.
Choose your relationships carefully
The adage “you are the average of the 5 people you spend the most time with” speaks for itself. Surround yourself with decent, positive, hardworking people who have a strong, moral, and spiritual compass and foundation, so that you can encourage and support one another, and add value to each other’s lives. As you expect to build great lifelong friendships, it is also important to be the good, reliable friend that you wish to have.
Find a mentor that can guide you, support you, and listen to you as you follow your path. A well-selected mentorship relationship is one of the keys to sustained success.
The choice of your life partner
The decision to marry will be one of the most important decisions you ever make. You must strive to partner with someone who supports you and encourages you to be your best version of yourself. The impact of the right or wrong choices is far-reaching and has significant implications on whether or not you attain your full potential.
Make an impact
How you impact the lives of others is the greatest yardstick of success. Use your gifts to make a difference in other people’s lives. Measure success not by what you get or how much you have, but by what you can give. By deciding to make a difference in someone’s life, you can bring so much more meaning, value, and fulfillment to your own.
You have a unique opportunity from where you stand to make a difference through integrity, honesty, hard work, discipline, and the pursuit of excellence. Be focused in that pursuit of excellence. There are no short cuts, but there are also no limit to your potential other than those that you may be setting yourself.