In this week’s Youth themed topic, we take you on a beginners guide towards on building your wealth.
1. Make a plan: For some people, it’s an early retirement, for others it’s building an emergency fund. Take small steps & achieve it. For example, put at least 10% of your monthly income into a savings account if you want to create an emergency fund, just in case something comes up.
2. Self-control: Use a balance sheet. It’s quite simple: you balance the money which goes into your bank account vs your monthly expenses. Make a budget for transport, food and drink, rent & utilities, mobiles & internet. If you have extra funds, allocate a small portion of your earnings to a ‘spending fund’ which lets you go out and enjoy life… in moderation.
3. Invest wisely: Overall, the country is doing well. The Colombo Stock Exchange (CSE) has been improving gradually, so you should consider investing a small amount into stocks which are ‘strong’, and over time reinvest, or take the safer route and look at preference shares or other investment options. However a word of caution: wealth takes time to build. If you lose money beyond a certain amount, walk away.
4. Improve your financial awareness: If you are not financially sound, now’s the time to start learning. The more you know about finances, the fewer mistakes you will make. Start by tracking where every Rupee goes, and then move on to the next stage. The knowledge learned and your personal experiences will allow you to generate more wealth and help you reach your financial goals faster. Some good books to start with include ‘The Investment Answer,’ ‘Rich Dad Poor Dad’, ‘I Will Teach You to be Rich’, ‘The Money Book for the Young, Fabulous & Broke’ and ‘Think & Grow Rich’
(Two great books to improve your financial awareness. Photo credits: Amazon)
5. Pay bills on time & skip the credit card: This is a favorite of mine, and sounds pretty obvious. However, a lot of people don’t pay their bills on time-sometimes they forget, or just don’t have a lot of funds. Bottom line is that companies will dislike and possibly slap you with a fine if you don’t pay bills on consistently, on time. On top of that, say no to credit cards. It’s a bad way to get yourself into debt by purchasing things which you don’t need with the money you don’t have.
6. Invest in what you need, not what you want: Speaking of needs, invest in the things which are important. As a young person, this may be a bank loan for your education, a car, stocks & bonds, investment plans, life insurance or a house. It makes less sense to overindulge in food and entertainment as they are things which you ‘want’, but are not necessary essential items which you ‘need’.
7. Stay Healthy: Sounds obvious but it makes a lot of sense to stay healthy. If you were to fall ill or get into an accident then it would cost you a fair bit on hospitalization cover and possibly lost wages. Take time to exercise and stay fit, because not only is it a good habit, but guarding your health is one of the smartest things you can ever do.
What do you think of these ideas? Give us your thoughts in the comments!
Disclaimer: The views shared in this blog are based on the macro economic conditions & industry status quo as per the time of publishing.
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