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What’s the best financial advice you’ve ever been given?

25 pearls of financial wisdom.

Faced on a daily basis with financial advice, tips and recommendations, we’ve compiled a list of some of the best financial advice worth sharing.

  1. Don’t depend on somebody else for money: Being completely financially dependent on another person can place you in a vulnerable position. People often find themselves trapped in abusive relationships because they cannot stand on their own financially. Regardless of how happy your partnership or marriage may be, tragedies do happen, and circumstances can change.
  2. Put your oxygen mask on first: With the rise of the ‘sandwich generation’, more and more people attest to feeling financially torn between financing their children’s education, on the one hand, and helping their aged parents financially, on the other. The best approach, however, is to first take care of your own retirement funding and put plans in place for a financially secure future. You’ve got to put your oxygen mask on first before you can help others.
  3. Start saving with your first paycheque: This advice might sound trite, but it is still important. If you don’t start saving early you may struggle to find room in your budget later on. As your financial commitments grow the harder it becomes to find money in your budget to save for the future.
  4. Spend less than you earn and invest the rest consistently in a well-diversified portfolio: Spending less than you earn is only the first step towards wealth creation. It’s what you do with what’s left that really matters.
  5. Find a way to earn money while you sleep: Active income is the money that you earn in direct exchange for your time and skills. This income is generally limited by the amount of time you are able to spend doing your job. Time is a great leveller because every person only gets 24 hours a day, and it can never be recreated or re-spent. Having a passive income stream means that your income is not proportional to the time you spend working. It allows you greater freedom, more choice and – most importantly – more time.
  6. Begin your marriage living on just one income: Many couples have claimed this to be the single best piece of advice they ever received. If you get married and are both earning good incomes, consider living on one income and saving the rest. When you have children, you will be grateful for the saved income which may make it possible for one of you to be a stay-at-home parent.
  7. Never take a job simply because of the money: Money is important, but it’s not the only thing that matters when considering a new job. Taking a job just because it pays more than your last job is a terrible idea. Money is difficult to walk away from once you have become dependent on it, and you may find yourself bound to a job that you hate. When considering a job, you also need to take into account the company ethos and values, group benefits, travel time, career path, work flexibility, leave, and how they treat their staff.
  8. If it sounds too good to be true it probably is: If an investment opportunity promises guaranteed returns that are way above what the market is able to achieve, stay clear. Sounding ‘too good to be true’ is a hallmark of all investment scams and frauds.
  9. Read the fine print: Before buying anything, make sure you read the fine print. Overlooking important terms and conditions can cost you dearly, especially when making big purchases such as property and vehicles.
  10. Never lend money to a friend: Soft loans to friends and family can spell disaster. Besides the fact you may never get the money back, it can ruin relationships forever. You could also be enabling their bad money behaviour by lending them money instead of encouraging them to take control of their finances.
  11. Pack a lunch every day: Besides the health benefits of packing a homemade lunch, eating on-the-go is expensive. You’ll be surprised how much money that could be channelled towards saving is lost to convenience purchases.
  12. Automate your savings: Don’t fall into the trap of saving what’s left at the end of the month. Map out your goals, calculate how much you need to save in order to achieve them, and them automate your savings.
  13. Don’t increase your spending when you get a raise: Avoid upgrading your lifestyle when you get a salary increase. If you are managing to live within your means, then rather use the extra money to boost your savings. Avoid the temptation to buy more house or car than you need simply because you have extra cash.
  14. Buy quality: Being money-savvy doesn’t mean just saving money – it means spending your money wisely. While something may be cheap now, it may end up costing you more in the long run. Instead of buying inferior quality items, save up until you can afford to buy good quality that will go the distance. Cheap products have a way of actually being more expensive than you think.
  15. Know what you own and why you own it: Never buy something without doing your research and never invest in something you don’t understand.
  16. Never marry for money: While financial security is important, money is never a reason to marry someone. Firstly, it places you in a position of financial dependence in the relationship and can become a tool for manipulation. Also, money cannot buy happiness and forever is a long time to spend with a person you don’t love.
  17. Don’t bank on money until it actually lands in your bank account: Spending money before you actually receive it can place you in a financially precarious position. Whether you’ve sold your house, been promised a bonus or cashed in a policy, wait until the money is safely in your bank account before spending it.
  18. Negotiate your first paycheque: Starting out your career earning less than you are worth can have long-term financial implications for you. Before going for a job interview, do your research and know exactly what a person with your skills and qualifications is worth. Don’t sell yourself short.
  19. Buy experiences: Avoid the temptation to compete with the Joneses. It’s a relentless race that you can never win. Instead, spend your money buying experiences that create memories to last a lifetime.
  20. Always pay more than the minimum repayments: Whether it’s your home loan, credit card or vehicle, almost pay more than the minimum monthly repayment. This will result in you paying less interest, settling the balance quicker and can also improve your credit score.
  21. Create a financial calendar: Set out a year planner for your money so that you can schedule in key dates such as tax returns, premium increases and deposits due. This will help you plan ahead and avoid nasty financial surprises that catch you off guard.
  22. Don’t withdraw from your retirement fund: Resist the temptation to withdraw the money saved in your retirement fund when moving between jobs. Besides for having to pay tax, you will also interrupt the magic of compound interest and comprise your retirement future.
  23. Go on a cash diet: Learn the benefits of paying cash for the things you need by going on a ‘cash diet’ for a month. It’s a very empowering exercise and leaves you feeling much more in control of your money.
  24. Study what you’re passionate about and never stop learning: Don’t let others put you off studying what you are truly passionate about. Commit to becoming an expert in your chosen field and never stop learning.
  25. It’s not a bargain unless you need it: Know the difference between ‘price’ and ‘value’. Price is what you pay whereas value is what you get. If you managed to buy something ridiculously cheap on a sale, it has no value to you unless you needed it in the first place.

ADVISOR PROFILE

Craig Torr

Crue Invest (Pty) Ltd

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