Countless movies have the theme of time travel where someone in their thirties gets zipped back to their teen years or their early twenties. Have you ever stopped to think about what you would say to your 20-year-old self if you could time travel?
This is what I would say:
The future seems like it will last forever when you are 20. But it won’t. The best time to start saving for your retirement if from your first pay cheque. And you don’t have to wait for your first “real” job either. If you are lucky enough to have a part-time job while you are studying, start saving. As a casual working at Edgars, I used to take home an average of R1 500 a month. If I had saved just 10% of R150 of that money each month, I would have saved R5 400 over the next three years. That might not sound like much but 40 years later, you would have saved R289 087 assuming that you earn six per cent interest a year. Let’s break that down further. R150 a month is just under R40 a week. If you skipped that morning coffee at the coffee shop every morning or stayed in one extra night a week, it will be easy to save this amount.
You’re only young once. Take advantage of your youth and do things that will work out to your advantage in the long run. For example, don’t allow yourself to be lured by debt when you are just starting out.
If you have a student loan, start paying it off as soon as possible or start saving towards an initial lump sum payment that you can sink into the student loan once you are qualified.
Take out dread disease cover and disability insurance when you are young and healthy enough to be low-risk so that you pay low premiums. This will stand you in good stead for future years when your health may have deteriorated and you need the cover.
Find something you love and investigate ways to make a career out of it. Most successful entrepreneurs start out doing something that excites them – if you can identify this early in life and make a career out of it, going to work will be a pleasure and not a chore.
Look for a financial planner who is about 10 years older than you. Ideally, this person is going to help you manage your finances for the rest of your life. It should be someone you trust (but not a family member or your boyfriend’s brother), who has the expert knowledge you need and ideally has been recommended by someone. “Recommended by someone” is not the same as the financial planner’s friend, girlfriend or family telling you they are great. You want a personal recommendation from an existing client of theirs, preferably a client who has been with them for more than a year or two. All financial planners must be accredited with the Financial Services Board and you can double check this on their website (www.fsb.co.za). Ideally, you want a financial planner who will charge you an hourly fee rather than one who wants to earn commission and will sell you products you don’t need.
You can join a low-cost medical scheme for just R412 a month. While you are young and healthy, you don’t require an expensive medical aid option. What you are looking for is a plan that will cover your hospital costs if you are ever admitted to hospital. Unfortunately, South Africa has one of the highest road accident death rates in the world. When you’re 20, the chances of you being involved in a car or taxi accident are significantly higher. You will also not have to pay any “late-joiner” penalties for joining a medical scheme later in life.
Finally, take the time to enjoy every moment of your youth. Laugh loudly, be brave and lay the groundwork now so that you have a secure financial future.