While a lot of people may have learned some tough financial lessons over the last year, many of these lessons are simple wisdoms around saving and spending your money wisely that have always applied- and always will. The Carrick experts share some valuable advice.
“It’s never too early to start saving,” says Carrick Mauritius Area Manager, Chris Hassall. “I only started saving in my mid-30s and find most of my clients only start seriously planning for their futures in their mid-30s, too. I started working at 16 and wish more than anything that I had started saving then. Everyone should look to save 20% of what they earn, no matter how old you are, for your long-term future. That future will be a lot brighter if you save from an early age.”
Money and emotion
Money should never be managed by emotion, says Paul Mitchell, Carrick Kwa-Zulu Natal General Manager. “We spend our lives believing that money makes us happy, working long hours day in and day out so that we can afford the things that will make our lives better. The truth is money is a tool which used correctly without emotional influence can help us achieve anything we want.”
Build passive income
Learn the power of compound interest and the power of saving early over longer periods of time, advises Andrew Moore, Managing Director: Carrick Wealth Zimbabwe. “Don’t get too caught up in investing in only property and other illiquid assets. Always have something you can access in an emergency if you need to. Most importantly, set clear goals and stick to them and understand the importance of building passive income for yourself in the future.”
Plan and budget
The secret to financial freedom is to start with a plan and a budget, says Carrick Gauteng General Manager, Scott Bell. “It’s important to know how much you are spending, and to ensure you ‘pay yourself first’. This could be as low as 10% of your salary, but ideally 15%-20%) which you choose to invest for the long term in a tax efficient manner. This discipline from a young age will put you on the path to financial freedom. As your salary increases, so should your allocation towards your investments. Importantly, this should not be dipped into for splurges along the way.” Bell also cautions to try stay away from credit, particularly short-term credit such as credit cards and personal loans as these are expensive.
Anton Schoeman, Carrick Western Cape General Manager quotes Edward Burke in summing up his philosophy: “If we command our wealth, we shall be rich and free. If our wealth commands us, we are poor indeed.”
He offers these valuable nuggets:
- Don’t spend money you haven’t earned on material things to impress people.
- Try and avoid credit as much as possible. You are stealing from your future self.
- Don’t bargain on your parents for a legacy or retirement.
- Be disciplined and make informed decisions.
- Invest for the long run.
- Compound interest is your best friend, so the sooner you start, the better.
- Do your research.
- Diversify your holdings across asset classes, geographic exposure and currencies.
- Have a plan and obtain a suitable advisor to help you along the way. A fool with a plan is better than a genius without one.
- There is a big difference between the ability to take risk and the willingness to do so. Match the two to find the appropriate investment strategy.
- Give to others if you have the ability to do so. If you have been fortunate enough to accumulate wealth, you have a responsibility to do good in life.
- Run the money, don’t let it run you.
- Don’t have more life left at the end of your money, rather have more money at the end of your life.