Looking back on your teenage years, what financial advice would you give yourself?
Happy Ngale, financial wellbeing consultant at Alexander Forbes Financial Planning Consultants, shares some of the rands and cents advice she would have given herself.
- Learn how to budget
Getting into the habit of healthy money management early is key. The pocket money from my parents could have been a great start in terms of learning how to manage my finances. This would have prepared me for when I started working and earning a salary, because if the habit of good money management is established at an young age, it is easier to apply these principles when you start to earn larger amounts.
- Avoid spending money on items I cannot afford
Teenagers experience peer pressure, which means wanting what your friends have. I would teach myself that I can have it if I can afford it, but if not then I can’t.
- Start a savings account
I would recommend teenagers open a bank account with a savings feature, as this teaches you to start putting some money aside. We need to embrace the concept of saving from a young age, to learn the benefit of earning interest and being able to buy what we want for ourselves.
Millennials vs. Baby Boomers
Ngale said the Millennial (Generation Y) mindset differs from those before them, namely the Generation Xers and the Baby Boomers, because Millennials “prefer to earn their money to spend it now. If they want to buy an item now, they will make a plan to have it whether they can afford it or not”. Baby Boomers, on the other hand, tend to buy on loan and develop a payment plan. “They spend most of their working life paying off debt.” Gen Xers are very conservative with their spending and prefer to save. When it comes to money, millennials strategise their spending; they are usually committed to getting what they want and will earn that extra cash to get it. Millennials are not lazy to take on an extra job to fund the sports car they want.
Source and image: Alexander Forbes