When you are young, saving money is the last thing on your mind but truth is a head start in saving and investing could set you up for a wealthy future.
To get you on the right track, start by breaking these seven terrible yet common money habits.
1. Not saving enough — or at all
There’s a difference between knowing you should save and actually doing it. When it comes to saving, retirement contributions and insurance can be a great place to start.
Ensure that you automate your contributions. This way, you’ll never even see the money before it’s stashed away, and you’ll learn to live without it.
2. Spending unnecessary money on the short term
Earning a first paycheck is liberating and thrilling, but it can be dangerous. As earnings go up, purchases tend to creep up as well. Spending all your salary makes it hard to plan and set aside money for the future, when you want to make a major purchase like a house, buy a car or retire.
Moderation is key, here. There’s no problem with the occasional drinks out or Uber ride home when you can afford it, but if you find yourself doing them all the time and feeling a little tight in the wallet, it might be time to find some alternatives.
3. Relying on Debit cards to pay for bills and daily necessities
Having a Debit card, you use responsibly is great. Using a Debit card to make ends meet all the time can lead to trouble. You won’t accurately keep track of your money in the bank and you might not be able to stop swiping the card when you are broke.
If you find yourself unable to cover your necessary living expenses without relying on a Debit card, it might be time to restructure your budget — or make one. Not sure where to start? Experiment with a Cash only diet once in a while.
4. Having no idea where your money goes
You don’t quite realize how quickly you can blow through cash until you start keeping track of each purchase. Even the seemingly insignificant “little” purchases have a way of adding up alarmingly quickly.
And if you redirect the money from these smaller, everyday expenses towards something more productive, like a retirement account, it can accumulate and grow into thousands of naira over time, thanks to the power of compound interest.
Take five minutes each evening to record everything you bought that day.
5. Waiting until you ‘have more money’ to invest
The problem with keeping a disproportionate amount of cash as an investment strategy is that your money is not working for you. While investing can be scary, it turns out that in many cases, the best investors put their money in the market … and then leave it alone.
Retirement savings are one way to invest, but if you want to get more involved, there are other avenues to explore. Ensure you read investment basics before diving in.