Financial tips for young people

I wish I had known earlier how much the financial decisions I make today will affect tomorrow.

I hope that by sharing some of the financial lessons I and others have learnt the hard way, it will prevent young people from making the same mistakes.

Say no to instant gratification

When I was younger, many of my friends wanted to impress women and each other by buying expensive things that they couldn’t actually afford. This resulted in them taking out multiple credit and store cards when they started working. It was great for a while because they could buy whatever they wanted. But a year later, all their earnings were going towards paying off their debt.

While it might be tempting to take out credit and store cards, you will be paying the price later on – sometimes even for several years. Ask yourself whether the people you’re trying to impress are worth the pain.

Find a financial advisor

It’s important to have an advisor from the minute you start earning money so that you can make better decisions on what to do with it (and don’t end up drowning in debt).

An advisor will work with you to come up with a financial plan that can be continually reviewed and adjusted. If you allow yourself to engage with an advisor at this early stage, you can make informed financial decisions that can pay off handsomely in future.

Plan for retirement right away

While retirement may seem a long way off, you need to plan for it as soon as you start working so you can harness the power of compound interest and be set up for a life of leisure.

Those who don’t save early, often feel caught off guard when retirement age starts creeping up on them and, while they might try put away large sums of money at the last minute, they won’t have the benefit of compound interest and may even compromise their quality of life by doing so.

Get life insurance early

Taking out life cover at a young age comes with advantages – you are in good health, it’s cheaper and you get much higher cover.

If you leave it too late, by the time you apply your premiums will be more expensive.

Peter Tshiguvho is chief executive of Metropolitan Retail

While it might be tempting to take out credit and store cards, you will be paying the price later on.