Money smarts for young professionals
After years of waiting tables, delivering pizza and babysitting, you’re finally on your way to climbing the corporate ladder. But along with the freedom that a monthly paycheck affords, comes the responsibility of managing your finances and plotting your financial future. So, where do you start?
1 Build a budget
Putting together a budget is an excellent way to take control of your finances, and it needn’t be a complicated process. A good place to start is to make a list of your monthly expenses and then track your spending. You’ll soon see where you can cut costs and where you need to make adjustments to stay on budget.
2 Ditch your debt
Staring a sizeable student loan in the face? Managed to rack up a few unexpected expenses on your credit card? Then it’s probably a good time to get to work on your debt. Settling your student loan and clearing your credit card will free up funds that you can then stash in a savings account for a deposit on your first house or future travel plans, or to use as an emergency fund. Speaking of which…
3 Start an emergency fund
If you’re unfamiliar with this concept, here’s the lowdown: An emergency fund is a safety net – it typically covers three months’ worth of living expenses – that protects you in the event that you lose your job or life throws a curveball like an unexpected medical or maintenance expense your way. If you already have an emergency fund, high five! If not, you may want to consider putting one in place.
4 Review your retirement
You’re way too young to start thinking about retirement, right? Well actually, the best time to think about it is when you’re young. That’s because the earlier you start putting money away for when you stop working, the more time your money has to grow. And that’s all thanks to compound interest, which allows you to earn interest, not only on your original investment, but also on the interest earned on the initial sum.
5 Get life cover
If anyone depends on you financially – it could be your parents, your children, or even a sibling – it’s important that you consider taking out life cover so that they’re still financially protected when you pass away.
Why start young?
Aside from the fact that you can’t predict when your life will come to an end, there are several other reasons to take out life cover sooner rather than later.
1 Your premiums will be lower. Your age and health status are two aspects that life insurance companies consider when calculating your premiums. Taking out life cover when you’re young and healthy, means your premiums will likely be lower than if you take out cover when you’re older. What’s more, if you take out life insurance early on, your premiums shouldn’t be affected even if you’re diagnosed with a serious illness later on.
2 Your debts will be covered. You may not own your own home just yet, but that doesn’t necessarily mean you’re debt-free either. Chances are you’ll have some form of loan to pay back, and with a life insurance policy in place, your parents won’t be the ones who inherit your debt – especially if they’ve stood surety on your student loan or co-signed your home loan, if you do already have one.
3 You’ll be prepared for big life changes. Getting married, buying a house, starting a family – these are all significant milestones and there’s every chance you’ll experience one or two, if not all three, in your twenties. By taking out life insurance early on, you’ll be ahead of the game and well prepared for these big changes.
If you’d like to find out about cover from Standard Bank’s direct life insurance services, get a quote or request that a customer service agent call you back.