Young people should make wise financial
decisions early in life to ensure they are not impacted by financial missteps
committed during their youth.
Baronice Hans, Chairperson of the Bankers
Association of Namibia says: “There’s nothing as exciting as getting your first
salary and realising that earning an income opens up many possibilities.
However, this should also be the time to step back and start thinking carefully
about your finances and what you want to achieve by earning an income. During
this stage, every financial commitment should be carefully considered because
how you start off will have a direct impact on your finances in the long term.”
“It’s quite common to see young people getting
excited about earning money and then begin to take on too much debt to
accumulate possessions they often don’t need, without having made provision for
savings,” adds Hans.
Here are some of the common financial mistakes
that young people must avoid:
By creating a budget, you will be able to plan
your expenses and keep an eye on what your money is spent on. A budget can help
identify any wasteful spending because it’s designed to help you track your expenses
and ultimately commit money to areas that take priority. Discipline is
important but there’s no harm in making room for entertainment now and then to
reward yourself for hard work later.
Taking too much debt
When you suddenly have access to credit, it may
be difficult resisting the temptation to just spend, but remember that debt is
a major financial commitment; therefore it’s better to take on debt that you
can manage and not feel overburdened. By taking on too much debt you may find
yourself not being able to cope with repayments. It’s better to focus on saving
money and earning interest on it, instead of unnecessary debt.
Not having an emergency
An emergency fund is designed to cover
shortfalls when an unexpected expense occurs. A medical emergency or a car
breaking down can have a huge impact on your finances and if you don’t have
funds for unplanned expenses you may end up relying on debt or having to tap
into your other savings.
Delaying saving for
The best time to start saving for retirement is
when you are still young because any delay might cost you more in the
long-term. While you might think there’s enough time to save for retirement,
it’s always better to save as soon as you start earning an income. Starting
early will most likely help you make building blocks towards a comfortable
retirement, ensuring that you benefit from compound interest and keeping in
line with the depreciating value of money.
“The road to financial freedom comes with
self-awareness and financial discipline. Equip yourself with as much
information as possible before making any financial decisions, in this way you
avoid making mistakes that can possibly compromise your finances in future,”
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