You're earning a salary, now what? 4 simple steps to build your wealth from the start!
by Kathryn Main
You have started your first job. It’s the end of month one and you just received your first salary. I can see the look of glee on your face as you ponder on how best to spend your hard-earned cash. I see the thought bubbles “Apple watch”, “A new phone”, “New work wardrobe”. Pause... Take a minute to think about it...
You worked hard to earn that money, right? Why throw it away on purchases you don’t really need. You are probably thinking, “You sounds like my parents”. As a mom to 3 boys and a single mom who has had many financial struggles in my life, I can tell you that I wish someone had given me this kind of advice when I started working. My life would have been a much smoother ride and my financial situation a stable one. Instead I lived in debt for 14 years and was blacklisted for 12 of those and not able to buy a car or finance a home when I got married at 24. Don’t be like me. Don’t set yourself up for financial failure in your early twenties.
Remember, keeping with the Jones's is a losing battle. People may look like they have the life you want on Instagram, but the truth is it is often far from the truth. You want to build a healthy relationship with money, creating generational wealth as opposed to just cash for the weekend. This not mean you cannot spoil yourself, but be sure to be mindful in how you are doing so. Go slow, and you will soon see that the expensive car your friend just bought, is costing her much more than she is is able to keep up with. Recent stats show that most people are living in debt no matter what their income is. So this talks to their relationship with money and living beyond their means as opposed to living for their own needs. Control your money and do not let it or society control you.
If you want to have a financially successful future, you need to start managing your money from your first salary. Here are 4 simple steps you can take right now to grow your financial freedom! Here is what you should be doing with your hard-earned cash.
1. Be smart with your money – Saving
Set up a saving pocket and save 15% to 30% of everything you earn on a monthly basis. Set it up as an automated eft the day you get your salary. This is called “Paying yourself first”. Why do we pay ourselves first? Saving is a mindset we have not been taught and its one we really need. Life is full of surprises and you never know what life has in store for you. Having cash reserves in the form of savings can help to alleviate a lot of stress financially if you lose your job or get sick in the future. Start saving towards retirement now and not in your 40ish and your quality of life will be better in your later years. Having money for emergencies like burst types will keep your disposable income for your pleasure.
2. Manage your money - Budget
Create a spending plan for your money. Know what expenses you have going out monthly. Be sure to allocate money to save, pay off any debt you have and money for yourself to live the life you work so hard for. Don’t spend all the money you have monthly. Always make sure you have some wiggle room in your budget.
3. Grow your money - Passive income
Start looking at ways you can start to create passive income for yourself. How can you start creating more than 1 income stream now? Look at investing online or growing your savings and enjoy the benefits of compound interest. www.easyequities.co.za is a great platform to do this for as little as R50. You can also look at other ways like setting up a side hustle from one of you talents, start ups and small businesses always need help in areas of social media, design, content creation etc. Do a bit of research and look at look at ways to diversify your income from the day you start earning. This will offer you a better standard of living and keep cash flowing into your bank accounts. Developing this way of thinking at at an early stage of life, will help you build a strong entrepreneurial mindset.
4. Protect your money – Insurance
Why would you need insurance as a youngster? Simply, you need to protect your income. I'm not telling you to go out and get life insurance but get an income protector and some household and car insurance to protect your belongings. Not having an income protector and getting sick and not being able to work will have a much more negative impact on your life than paying the R200 a month to protect your income. With the current times we are facing, this is an incredible way to keep yourself protected during times of decreased or no pay.
Start being money savvy from the day you earn your first salary and you will create wealth rather than riches from day 1. These healthy habits, will help you not only manage your finances better but grow your wealth, the ideal we hope for in South Africa.
Kathryn Main writes for Sivuka. CEO of MainMultimedia and the Money Savvy brands, quirky, determined, visionary and masterful are just some that spring to mind. Kathryn is an author and award winning businesswoman and has won awards for her advertising agency as well as Money Savvy Kids. Kathryn has a passion to change the face of education on the African continent through financial literacy education and training. The Money Savvy brands are revolutionizing the way financial knowledge is disseminated to younger generations of South Africans. Money Savvy Kids + Teens promotes in youth the skills, knowledge attitudes and behaviors required to be financially independent.