Many graduates can benefit by adopting good money management principles early in their careers, to ensure a guaranteed, stable and stress-free financial future.
Whether you are entering the work environment for the first time, starting a permanent job after an internship or running your own business, taking control of your finances right now can help you avoid developing bad money habits that can prove difficult to overcome.
Here are six money management tips for graduates to consider -
• Save for retirement earlier: Some individuals only realise halfway through their careers that they will not have enough money to live off during retirement. This often results in them having to compromise some of their financial needs in order to make up for the shortfall.
• Living beyond your means: Although it is essential to spoil yourself and have fun when you start earning a salary, avoid getting into the habit of spending beyond your means. Try and separate needs from wants, and avoid living a lifestyle that leaves you unnecessarily indebted.
• Good vs bad debt: Not all debt is bad for you. Knowing how to use debt to get ahead in life, as well as using the right form of credit, forms an integral part of a good money management strategy.
• Saving: Regularly putting money away for personal needs, investments or emergencies cannot be overemphasised.
If you find it challenging to save money on your own, set up a monthly deposit, where the bank can deduct money from your account and put it away for you.
It is also important to take out cover for insurable risks, to avoid paying from your own pocket when disaster strikes. Furthermore, if you already have a family or people depending on you financially, life cover should be considered.
Renting vs buying
Making the right choice, depending on your individual circumstances, can help you save money in the long-term. For example, it may be more cost-effective to rent if you have a job that requires you to relocate regularly. Similarly, if you do not have a job that requires you to travel or relocate, buying the townhouse or flat you are staying in is not only cost-effective, but can be a good investment for the future.
Plan for holidays
Try to plan a year in advance for expensive holidays. This will give you enough time to put money away. You can also benefit from massive discounts when booking flights and accommodation in advance. Although the above tips are not conclusive, they will give you a good foundation for managing money adequately. Also, take into account that there isn't a perfect formula for handling money, as it all depends on your individual circumstances. The best approach is to have a plan in place, budgeting regularly and being disciplined when it comes to money matters.
* Llewellyn Wrinkler is the portfolio manager: young professionals at FNB