Five money lessons to master before 30

1. Make your money work for you

Always budget to save. While a budget can help you keep an eye on how much you spend from month to month, it must also be used to facilitate savings. As you consistently depend on a budget to manage your finances, you get a better handle on your money which makes it easy to identify wasteful expenditure.

2. Have financial goals and stick to them

Most young people believe having financial goals starts once one has a secure, permanent job and a large set of responsibilities. On the contrary, setting financial goals must begin early in life and be practiced throughout. Whether you are a student or holding down a temporary job, know what you want to achieve with the money you have. Start practising basic money management skills, such as savings, budgeting and living within your means.

3. Don’t bling with debt

At some stage you will need debt, especially for big-ticket items such as a house or a car, and this may require you to approach a lender for financing. Avoid taking debt just to match the lifestyles of friends or colleagues. For example, instead of a buying a big fancy vehicle, rather opt for a smaller and simpler car. This may leave you some room to save for a deposit towards your house. Know what you want to achieve and never let your plans get derailed by other people’s lifestyles.

4. Protect your savings

Savings goals must be linked to achievable milestones. Know what you are saving for and commit to it. For example, if you have set aside savings for emergencies, be sure to use the money only when you have an emergency. This is about discipline.

5. Review your financial position

You may have made the right financial decisions in life, such as having a good base of savings, manageable debt and controlled spending patterns. However, this does not mean you don’t, from time to time, have to review your finances because, for example, external events such as interest rate cuts may impact your savings.

Naidoo is programme manager for FNB consumer education

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