For the young generation, the concept of planning for the future and saving money may not be a priority. However, it is important for them to start taking care of their finances from as early as possible to achieve their financial goals.
Saving and budgeting will teach them about financial discipline and how to stay on the money track.
Motlatsi Mkalala, head of main markets at Standard Bank, offers seven tips to help people reach their financial goals.
Save your money before you spend it
Put aside a portion of the money you received before you spend it, whether it’s your allowance, income from your job or a gift. This will prevent you from spending all of your money, including the money meant for your savings.
Open an interest-bearing savings or cheque account
Opening an interest-bearing savings or cheque account will keep young people motivated to save. This will give them an out-of-sight place to put their savings and give them the opportunity to learn about the effect of interest.
Speak to your parents about matching your savings
Young people who are under 18 or still studying can ask their parents to match their savings, or at least half of it, if they come from a middle-class or affluent household.
Have a set of goals
Setting goals will make the process of saving much easier because you will know what you are saving your money towards. It will also prevent you from being tempted to spend your money unnecessarily.
Track your spending
The smart way to save money is to keep track of it. Young people can track their spending using a spreadsheet or an app. It will give them an idea of where their money is going and where they can cut back on spending.
Give yourself an allowance
If you have a side hustle or part-time job, pay all of the earnings straight into the account meant for saving. Doing this will stop you from being tempted to spend your money and instead cultivate financial discipline.
Instill delayed gratification in yourself
Delayed gratification is a person’s ability to resist an instant reward so that they can get a more valuable reward in the future.
You can teach yourself delayed gratification by making a list of your financial priorities over the next one to three years. Then create a plan to save enough money to take care of each of them.
Starting the journey of saving at a young age will empower you in the short term and bring you many long-term benefits.
“Don’t be deterred if you are only saving a small amount to begin with; the magic of compound interest means that when you start early, even modest amounts grow into large sums,” Mkalala said.