Disclaimer: I'm not a financial advisor. This isn't financial advice—everyone's situation differs. These are general, practical tips for young people to consider.
Managing finances wisely sets you up for freedom and stability.
Here are universally sensible principles to guide you:
- Spend less than you earn: Unless it's an investment with above, average returns, prioritise frugality to maintain control.
- Build an emergency fund: Keep a reserve for unexpected crises—life happens, and you need a safety net. An awesome goal would be 6 months of living expenses pretty early in life. In a funny way, that can be your get stuffed money the wealthy use when things go pear shaped.
- Avoid high interest debt: If you incur it, pay it off quickly before tackling low interest debt. Nah, just don’t do it!
- Invest early and consistently: Even small, regular investments compound significantly over time.
- Diversify investments: Spreading risk across assets reduces exposure to single point failures (though focused bets may suit specific ventures).
- Budget with intent: Track every dollar and ensure your spending aligns with priorities you're content with.
- Optimise consumables: Treat household purchases like procurement—buy in bulk or from cost effective suppliers to save long-term.
- Monitor accounts daily: You can't manage what you don't see—check expenditures across all accounts regularly.
- Limit lifestyle inflation: Extra income shouldn't fuel flashy purchases (e.g., brand name items) that lose value—build assets first.
- Think before buying: Most purchases end up in landfills—prioritise quality over quantity to avoid accumulating junk.
- Make your own lunch: Fastest way to save money is stop all the little expenditures like cafe lunches and coffess. If you make your own you’ll save a fortune.
- Choose quality over cheap fixes: A single durable item often outlasts multiple low quality ones, saving money and clutter.
- Balance long term and short term: Plan for the future but enjoy life now—experiences matter, and you may not reach 60.
- Scrutinise insurance: Read the fine print, understand coverage versus cost, and avoid being overcharged by tricky policies.
- Know your tax obligations: Set aside funds for potential tax bills to avoid surprises.
- Explore multiple income streams: Weigh the effort and costs. Side hustles can drain time or money if mismanaged.
- Be cautious in market dips: Opportunities and losses abound. Stay prudent to avoid reckless mistakes.
- Seek professional advice when needed: Structure complex decisions carefully, but beware of high fees.
- Evaluate superannuation fees: Not all funds are equal—compare fees and performance to maximise returns.
- Learn about money yourself: Schools won't teach financial literacy. Take responsibility for your financial education, or pay an advisor to manage your money for you.
- Understand risk: High risk investments can soar in good times but crash hard in bad ones. Avoiding a 50% loss can be as valuable as a gain. Assume things can go wrong.
Conclusion
Financial discipline is about intentional choices. Spend wisely, save strategically, and invest for growth.
Track your money daily, prioritise quality, and balance present enjoyment with future security.
Educate yourself, stay cautious, and don't let others' systems dictate your wealth.
Start now to build a foundation that supports your goals.