For today’s youth, the financial world is a complex place. We look at five must-knows to boost the financial literacy of young people to help them get on the right path to their next stage of adult life.
The following areas are a good place to start the financial literacy conversation with the young adults in your life.
1. Manage your cash flow
Whether you want to call it cash flow management or personal budgeting, having control of your cash is critical to money management. Create a budget that allows for fun but aims to have cash left over each pay day for saving.
2. Saving is the bedrock of wealth
Without saving it is impossible to build wealth. Saving provides the funds to buy a home or a portfolio of investments so it’s definitely the building block to financial security.
3. Savings is not the same as investing
Saving essentially means forgoing spending today to have cash leftover tomorrow. Investing on the other hand refers to how you put that surplus cash to work to make money.
There are a number of options to choose from that don’t require a significant amount of money to get started in, including cash deposits, fixed interest securities, property and quality shares.
4. Manage debt wisely
Without debt none of us would be able to buy a home or investment property – assets with the potential to rise in value over time whilst also providing a roof over your head or a potential source of additional income.
The trick is to make good use of debt that increases your wealth while minimising debt that can eat away at your financial wellbeing through high interest charges.
5. Choose the right credit card for your needs
At some stage you’re likely to need a credit card. Look for a low rate card with low or zero annual fees at least until you have a clear idea of your card usage pattern. Cards offering reward points can sound tempting but they come with high interest rates and unless the card balance is cleared in full each month the interest costs could outweigh the value of any rewards.
For more hints and tips on managing your money, or if your millennial would like to discuss their financial future, contact our office on 03 9748 7999.