Being young is a gift that no one else can ever take from you. However, this gift is only valid for a short time and if you don’t put it to proper use you’ll most likely squander it like 95% of people do. Put simply, the earlier you stop “talking the talk” and start “walking the talk”, the better!
How can one “walk the talk”? Today we would like to introduce you to 6 smart money moves that will help steer you in the right direction right from a young age. These are crucial life-lessons that are worth sharing with everyone.
1.Keep your mind open to new opportunities
Don’t close your mind simply because you have a job that you “think” is paying you well. Don’t close your mind simply because you’re in the first year of college and you think four years to the graduation day is such a long time.
Life is changing very fast nowadays and if your dream is to swim with the sharks one day then you need to be open-minded. In school, don’t just bury your head in the sand and hope that you’ll automatically get employment after receiving the graduation certificate. In life, don’t get contented with that small job and think that you’ve made it big.
Keep expanding your horizons – never settle down in your comfort zone. If you hear new ideas, always grab them, research on their viability and then implement them if they are worthwhile. In other words, keep your rudder ON always.
2.Start thinking about buying or building a home early enough
A recent study showed that most Kenyans spend at least 30% of their income on rent alone. Now, let’s take this into perspective. If you spend 30% on rent, 30% on school fees for your children, 10% on transport, 20% on medical care and send the remaining 10% back to your folks in the rural areas…what are you left with? 0!
In other words, until you manage to buy or build a home, a significant chunk of your saving power will be depleted and you’ll not be able to grow your economy as fast. So think smart, start planning for your future home today – else you’ll find yourself stuck in a cycle of servicing bills monthly just to survive.
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3.Understand the concept of compounding for making long-term investments
Compound interest is the best way to create a stable future for yourself and it works when you choose to invest in long-term projects especially when you’re still young. Here is an example.
Juma, who is 20 years old, invests Ksh5,000 a month in an investment option that earns him 10% annually. His meager savings by the time he turns 40 years will be Ksh3,486,500. At that point he can decide to stop making the monthly contribution of Ksh5,000 and leave the Ksh3,486,500 to keep growing on its own as he focuses on other things in life.
Now do the math of compounding Ksh3,484,500 by 10% over the next 10 years to see how much Juma will be making passively by the time he reaches 50. Juma’s friends who spent their money in parties will probably be begging their employers not to send them to early retirement at this time. But Juma on the other hand will be more than willing to take an early retirement so that he can enjoy a quiet life because his money is working for him – thanks to compound interest rate.
Examples of schemes where you can compound your money include: Unit trusts, treasury bills and life insurance.
4.Invest in yourself
There are two ways in which you can build wealth. The first way is to sacrifice whatever little you have and save it continuously over a long time. The second option is to continuously increase your income so you don’t compromise on your life standards and you still save a pretty sum.
The second option is the best one to take when you’re still young and full of energy. Invest in yourself by learning and acquiring a new set of skills. Work hard to build your own recognizable brand so that you’re easy to market by the time you turn 30.
In other words, this is the time to build your own brand :- Brand Juma, Brand Naliaka, Brand Mwangi, Brand Joseph etc.
This is not the time to hide behind someone else’s shadow! Because without a brand, you’ll not have lots of bargaining power in future and hence you’ll not be in a position to raise your income standards accordingly.
5.Learn the science of stock trading and money markets
It is difficult to build wealth on savings and salary alone. If you want to play in the big league, then you need to practice with the big boys. Likewise, if you want to introduce a multiplier effect to your money math then you have to understand the science of making money.
Taking time to understand the scope of investment avenues like Treasury bills, unit trusts, stock trading and currency trading is something that every person who is below the age of 30 should seriously consider doing. This knowledge can come in handy when one seeks to grow their long-term savings and guarantee their future.
6.Start a business
In life, there are two options to advance ahead. The first option is to climb up the corporate ladder step-by-step to the top until you become a renowned CEO. This is the most difficult path to take right now especially given how difficult it is to secure a corporate job in this country in the first place.
The second way is to build a ladder for yourself. If you build a ladder for yourself, you’ll not have to beg anyone for an opportunity to take the upward steps. Moreover, you will be able to move with your ladder wherever and whenever you want.
Starting a business is the easiest way to build a ladder (which although may take time) comes with its fair share of rewards in the long-run. Our advice to anyone who is less than 30 years of age is that you should start building your ladders early enough so that you have enough time to make mistakes and correct them. Moreover, if you start early enough, you will have enough time to build a longer ladder that allows you to touch the sky like no one else can.
You can choose to live your 20’s like everybody else does…and live an ordinary life forever. Or you can choose to be wise and live your 20’s like nobody else does…so that you can live the rest of your life like very few people can. The choice is in your hands. Make the wise choice today!