The basic principles of financial success do not change over time. Despite this, younger generations don’t always take on board the lessons learned by their parents and grandparents. With age comes the benefit of hindsight and an understanding of the consequences of choices made early in life. These are the timeless principles that young people need to know:
- Get into the habit, right from your very first pay, of not spending everything you earn. Saving is not the only way to build wealth, but spending more than you earn is a fast way to lose what you have. A habit formed early in life will last a lifetime.
- Have clear goals for how you want to use your money and manage it proactively. You can choose how and when you want to spend your money, so do it in a way that will achieve your goals. Money can only be spent once, so make sure you spend it on things that are important to you.
- Don’t be greedy. Take your time to enjoy life and build wealth. Those who acquire wealth slowly and spend it slowly do better in the long run because they don’t take unnecessary risks.
- Avoid going into debt to buy things that don’t increase in value. Taking on debt means high outgoings and less ability to create wealth.
People can make choices when young that they later regret. These include:
· Not taking out life and health insurance before health issues arise
· Taking on debt to buy an expensive car when a cheaper one will do
· Waiting too long to purchase a property, or not buying one at all
There is never a right or wrong with any financial decision, but it is important to think long term and keep in mind the consequences of choices made.