You’re 18, an adult and your life and priorities are changing fast. Money is a central part of your life and so is knowing how to make and manage it.
It’s easy to feel pressured to fit in – to spend like your friends or get stuff you’ve seen on TikTok. But hey, don’t fall prey to social pressures. And never feel ashamed of your budget.
Financial stuff tend to use fancy words which you may not understand at first but don’t feel discouraged by that. Google the words you don’t get or ask someone about them.
We know how it is to manage your money by budgeting or planning short-term savings. You often think as far as your next stipend or pay cheque and no further than six months max.
Here’s a quick tip that will help you in the long run. Save at least 20% of your income every month. The temptation to tap and buy is great but try your best to avoid it! Self-control and discipline are just as important as knowledge and skill when it comes to managing money. Track your spending habits and download a budget app on your phone to help you manage your money a little better.
Use of credit
- If you wouldn’t pay cash for it, don’t buy it on credit.
- Always check the charges.
- Don’t fall for Buy Now – Pay Later Schemes.
Making investment choices
- Understand your risk-reward appetite (Try this quick questionnaire).
- Start low-risk, invest in cash Individual Savings Accounts.
- Don’t invest in the unknown.
- Invest in a company that follows your values.
- Pay close attention to investment fees and charges that will eat into your returns.
- Look beyond the now and read how compound interest can make your money work for you.
- Understand the GAP
- 40 euros a month at 18 becomes (figure) when you are 65;
- 40 euros a month at 40 becomes (figure) when you are 65.
- Act Now to Benefit More.
- Understand your spending habits.
- Split your monthly costs into:
- Definite (NEEDS) e.g. (Petrol, Rent, Subscriptions, iCloud storage, Medications).
- Random (WANTS) e.g (Going out, food, clothes, skin products etc).
- Divide your monthly salary or stipend into:
- 50% covers your Definite costs
- 30% covers your Random costs and
- 20% goes straight into Savings.
- Anything left over is your choice!
- Always spend less than you earn.
- Set up a monthly direct-debit to your savings account of 20% of your salary for the 2ndof every month & WATCH YOUR SAVINGS GROW.
Making large purchases
- If you can’t really afford it, think again. Say you’re thinking of buying a car – can you afford the running costs (e.g. insurance, registration, maintenance)?
- Before buying something, think about how you’ll pay for it.
- Don’t compare yourself to others. Buy only what you can afford.
- Save 3 months’ income for a rainy day. Broken phone, car repairs – you’ll have money set aside for them.
- Pay for things you need before paying for things you want e.g. car insurance before getting alloy wheels.