By Marli Naidoo
Entering the adult world and having to make adult decisions can be like trying to win a bicycle race with training wheels. When you become 18, you may all of a sudden open accounts, sign contracts and incur debt. The market is well aware of this and also knows very well that most young adults do not have the knowledge to make wise decisions. It is therefore your responsibility to get as much advice as possible and to gain knowledge. Here are some important financial pointers:
Only run up debt when it is really necessary. The best way to buy something, is cash, even if you have do without the desired item for a while.
You do not have to be rich to invest money. Use the little you have and invest it in a reliable fund where you will build up savings and where your money will draw interest and become more with time.
Save! Make sure that you put away something every month, even if it is a small amount. You may just need money for an emergency and will then not have to lend money to pay for it.
If you do have to take out a loan, stay away from loan sharks as far as possible. Their interest rates are sometimes so high that you will pay back up to four times the original amount over a long period of time. Talk to your bank or a financial adviser and make sure that you are charged a low interest rate.
Spend less money on social outings. You can spend your money better and save more.
It is more difficult to get out of a hole than getting into one. If the debt you incur does not help you to make more money, is it worth its while?
Learn how to handle a bank account. Some young people don’t know how to interpret their bank balance. Also make sure that you know how to read a bank statement.
You must know how to draw up a realistic budget and stay with it. If your eating-out money is finished and you only have your rent left, you should have enough self-control to know that you cannot use your rent for eating out. Ask your parents to help you. They can teach you how to calculate how much money you will need for food or petrol every month.
Understand the difference between needs and desires. When your parents take care of you, they pay for everything you need and you spend your pocket money on whatever else you want. However, when you have to fend for yourself you may be inclined to buy unnecessary things and then have no money left to pay what you have to pay.
Learn how to read and understand financial documents.
Find out how to build positive credit effectively. Sometime or other you will have to open an account so that the credit bureau can determine whether you are reliable with instalments. When you want to buy a house or business some day, your positive record can improve your chances of a successful transaction.
Make sure that you know how to keep your financial information secure and not to be taken in by scams, Do not give your bank details to Tom, Dick and Harry and know which suppliers are reliable.
Don’t try to do it all by yourself, but then also do not appoint your 18-year-old roommate as your adviser. If you are unsure or still wondering, get help from a more mature person who has your interests at heart. Do not be too proud to ask for help.
Money Management: https://www.moneymanagement.org/blog/2015/05/nine-basic-financial-skills-no-young-adult-should-leave-home-without
Fast Web: https://www.fastweb.com/student-life/articles/the-5-key-components-of-financial-literacy