Published on February 21st, 2019 | by Jones0
Financial lessons every young adult needs to learn
Once you leave the nest and have graduated from university, if you chose that path, you have to face some hard truths. Such as not having your parents around to clean up your clothes and dishes after you have used them, the fact that you now have to buy and cook your own food (two-minute noodles for dinner still counts as a meal, right?) and then there are the financial lessons that you will learn as you navigate your young adult life.
One of the financial lessons you will learn is that you need life cover no matter how old you are. Having life insurance means that you are protected against every eventuality, as we all know how unpredictable life can be. So, if you are just starting your journey as a young adult, read on below for all the financial lessons that you need to learn.
Yes, you DO need life cover
This was mentioned above, but it is important to understand exactly why you need a life insurance policy for yourself and even life cover for your parents. If you die and are the sole breadwinner of your household, this could cause immense stress for your grieving family.
Or, if you become disabled due to a critical illness or accident and are unable to work, life insurance pays out a lump-sum that will cover necessary expenses while you are recovering or unemployed. You might think you are too young and healthy to even consider life cover right now, but it is important to think about your long-term financial future from a young age. Ask a broker for advice before you apply for the first life insurance offer you see online.
You need to create and stick to a budget
When you first start earning a salary, it can be tempting to spend it on treats for yourself. After all, you did earn it, right? But this could become detrimental to your finances, which means that you need to create a monthly budget that you stick to and do not break.
Your budget will need to include fixed monthly expenses, such as rent, car repayments and insurances. It should also include living expenses such as utilities, petrol, and groceries, which can fluctuate on a regular basis. Once these have been added up, the remaining amount is considered to be “disposable income” and can be used for luxury items or even for repaying accounts. Be sure to keep this budget in mind so you do not spend money unnecessarily.
Saving is important
Once you have figured out your budget, you should look into saving a certain amount each month in order to remain financially secure. But, don’t simply save money for the sake of saving, you should have set financial goals to reach so that it makes sense to keep money aside on a regular basis.
For example, one of your financial goals could be to move into a larger flat at the end of the year. By saving a set amount each month, you will have enough for the deposit and the other expenses. Many young people think that saving at a young age is not important, but this will hurt your financial future and could put you further into debt. You should try to save at least R1000 a month, if possible, but remember to stay within your means and budget.
You need to build a credit history
Now, you might not like the idea of having a credit card or an account at a store, but not having a credit history can be just as detrimental as having a bad one. Before you sign up for a credit card, ask your bank for advice on which option best suits you and your needs as well as your budget.
Ask for an explanation on how credit works and how best to use it for your future goals. For example, if you would like to buy a house or car in the future, you will need to have a credit score in order to do so. Remember to keep your credit score positive by repaying bills on time and making sure that you pay them on the correct date. You can find your credit score online for free, which can help with any loan applications you might have down the road.
Always ask for help
Some people believe that money issues should be kept private, but this is an outdated way of thinking. If you find yourself in financial trouble or if you do not understand financial terminology on a new life cover contract, ask for help from an authorised financial service provider or from your insurance provider.
Asking for help will give you peace of mind and will also ensure that no monetary mistakes are made that could harm you in the long run. Be sure to read all the terms and conditions of any loan and keep to your budget as much as possible when going on your next shopping spree.