Money and Me
November 19, 2024
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The ease of finding a sound financial footing starts early in life, as soon as the first job comes along. This is usually in the early 20s - an age tagged as volatile and exploratory. It also may vary with a person's social-economic status. Some people are born into wealthy lineages, and a section falls on the other side of the divide.
Narratives around financial success are a dime a dozen. But, they scream for a specific set in financial management skills. These are best ingrained as lifestyle choices, in the early 20s and cultivated towards the 30s. This is the halfway mark to retirement age.
Social-economic status aside, with the right mindset, approach, and investment into your skills, anyone can be financially successful - by age 30.
The pressure to be cool is real and misleading. Physical friends may be easy to avoid - till social media kicks in. The phrase 'setting standards' is a popular caption for images on social media. Someone travels to an exotic place, buys or leases a new ride for outrageous prices - and bombards social media with it. This is often in debt.
We all know someone who's rented a car to visit the village. Shipping in designer clothing. If one succumbs to this pressure and indulges, they significantly slow down their financial dreams. It's prudent to remain immune - and, focused - as the 20s will pass by in a blur.
Save money! Set daily, weekly, monthly, and annual savings targets. No matter what, have at least 25-35% of your earnings set aside for savings. The easiest, foolproof way to achieve these targets is to set systems in place, at the employer or bank level - for automatic remittances to savings accounts before earnings hit your account.
For an entrepreneur, practice a bit of discipline. Enforce a savings target - set aside a daily fixed amount to be remitted to a savings account. Local Sacco's come into effective play in this instance, as they also avail financing options.
Saving is not enough. There's a need to have your money working for you as much as possible. It depends, but try re-investing 95% of your savings. It depends on the know-how, and amount of savings - but lots of investment options are available.
At this point, think of a mentor. Seek advice and guidance, from knowledgeable sources. Is it the money-market fund? Mutual funds? Shares and government bonds? Study, learn, and research as much as you can about investment opportunities.
Align your goals with articulate advice, from a suitable financial mentor.
First-time jobs are usually secured at entry levels - remunerations, and other job perks. Job stagnation, especially in the corporate sector is definite if a new employee doesn't invest in themself. Enroll in new courses that add value to your position. In a cramped workspace, what sets you apart from the herd? How can you secure promotion if you have regular qualifications as your office peers? Gain progress with new courses.
For additional revenue streams, identify a favourite hobby - and monetize it. Can you bake pastries and cakes over the weekend for your circle of friends? You love farming - build a vegetable garden or an orchard. If you kept a few layers, you can hive off more savings from your earnings - and, sell off surplus eggs.
Remember, any extra earnings from a monetized hobby should be sent straight to a savings account! Don't get comfortable!
In the exploratory 20s, the road to financial stability is riddled with three deadly booby traps: Drugs, alcohol, and gambling.
It's prudent to rid yourself of these habits, and any company or relationships that lead to this influence. The effect of gambling is gradual - but, annually - a huge section of the budget is lost. Find a way to wean off addictive gambling habits.
Drugs, besides wrecking your finances - leave your professional reputation in tatters. You'll miss work and neglect personal grooming. A bad reputation will have you passed over during promotions and company-sponsored classes or excursions.
There's a simple rule: If you need something - buy it in cash. If you cannot afford it, leave it.
Debt is expensive. Interest accrued in paying off debt is money worth double in savings. It gets worse if a depreciating asset is acquired with a debt financing deal. Unless it's a budgeted for part of business investment, a car in your 20s may not be a well-thought-out idea.
The first job comes in your 20's. An emergency fund is necessary - from the first day. It's exactly what the name implies: An amount of money set aside for the unseen, rainy days. Rainy days and emergencies always linger overhead - like rainy clouds waiting to burst.
An emergency fund is easy to fund. Set up a separate account, make arrangements at the employer or bank level to remit a figure into the account, as soon as the money hits your main account. Lots of times, emergencies - if unbudgeted for - lead one into debt. A well-going job may terminate without notice - how long can you last without an income? An emergency fund comes into play.
In a nutshell, to achieve a financial breakthrough before age 30 one needs a multi-faceted approach. The key secret, though, is cultivating a lifestyle that has one living within his means.
Reduce the cost of living no matter how much you earn. Make networking efforts - expand your networks to increase job and investment opportunities. Seek a circle of friends that challenges you - intellectually and financially.
Ethics, too. Be upstanding, in society. Honest, truthful, competent, and hardworking.
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