…or at least have the OPTION to retire at the age of 40-45. It’s nice to know you have an option. When I started out in the corporate world, post articles, almost 7 years ago, I was crazy naïve. Had I known then what I know now I would have done things differently? So my message to the 20 something’s of the current day is to learn from my mistakes.
Yes, you are young, but you won’t be young forever #life. Define your goals, what you want for your future self, now. And don’t have the misconceptions that I had about the Corporate world. Yes, it can be fulfilling for your career. But character erosion does occur due to politics (which are inevitable). It all depends on what you are chasing I guess.
I suppose I am in a better position now to rethink financial goals. 7 years ago we didn’t have a child. Nor did we have a house. Seven years ago ‘we’ were still thinking in terms of ‘I’. But if I had a proper view of things I would have established that:
- I do not want to work in the corporate environment forever
- I want to start my own business at some point
- I want to at least have the OPTION of retiring at the age of 45
Had I been thinking along those lines and with those goals in mind constantly my standard of living would have shifted accordingly. The one thing I have done which counts in my favor is the fact that I started a Retirement Annuity as soon as I commenced articles. So that’s before I even hit the corporate world. It wasn’t much. I think it was something stupid like R200 per month. But investing R200 per month at 21 is still worth A LOT more than investing R500 per month at 31. Time value of money. Hit that on google. If you want to skrik.
One of the best saving mechanisms you can use to start saving is a UNIT TRUST. Read up on one of my previous posts which gives you scope on exactly how you can go about doing this. The people at Investonline have been especially helpful regarding this and are especially great at communicating fund development, growth and general savings/financial news on a weekly basis. I should have started my unit trusts so much earlier than I did. But hopefully, in a few years, I will be like ‘Im so glad I took out those unit trusts when I did!!!!’ IA. Its one of the best and most risk-averse ways to grow your money (depending on the portfolio you select).
Reduce your living expenses
A lot of the time people think that they have very little to no disposable income available for saving. And this is because they do not perform a proper analysis of their income at a high level. So at a high level, determine your goals. If it is to live a high-end status life up until and beyond retirement age then, by all means, live it up. The budget does not affect you. But if you are like myself and my husband, where we don’t have the kickstart or financial safety net of parents to back us up, you need to budget. You need to plan. You need to set 30-50% of your salary aside for saving and then apply the balance to your expenses. If your goal is to live comfortably now and have the option of retiring at a reasonable age. Also, by living a simple lifestyle, the idea is to continue this into retirement and continue saving while you’re in retirement. Maybe not at such a high level, but by then the habit would have been established.
The lifestyle thing – in your twenties you are pretty impressionable. You tend to either follow the crowd or want to stand out. Where does this come from? Ultimately it stems from insecurity. A desire to fit in, to belong. You think the right clothes from Zara or Topshop will do that for you. Or driving the right car. We are so blinded by this need that we ignore the devastating financial setbacks that these decisions bring along with them. You end up buying these things and wearing/ driving them to work…the very place that is paying your Gaad dang salary, to begin with. Essentially you are just writing off that money. You are financially flat-lining.
How to resolve it – dig deep and get rid of the insecurities. Easier said than done. Sometimes it requires ditching the immature crowd. Well, then that’s what you need to do. That crowd is not worth your time or character if you are required to ‘keep up’ materially.
APPROACH TO DEBT
House and car debt…those are necessary. Especially if as in the case of myself and the husband, you don’t have a fallback or someone to give you that financial helping hand. We didn’t opt for the fastest, racist, or in my case, newest cars. We knew what traveling with public transport was like and for us, the purpose was to travel from A to B. So as long as the car could perform at a basic level & did not require any massive maintenance then that was going to be our choice. I’m a damn proud owner of a 10-year-old Toyota Runx. ‘But Faz, you are a CA, how can you drive a 10-year-old Toyota’. Its BECAUSE I am a CA that I will drive the 10-year-old Toyota. Because I know better than anyone else that a car is a liability more than it is an asset. That value depreciates EVERY SINGLE DAY. As long as it is serviced regularly and does not require further financing, why should I be concerned? Why should other people concern themselves? Will they pay my installments if I buy a new car? No. I will.
A great way to save in terms of purchasing a house is to SAVE IN YOUR BOND. Whatever you can afford to put into your bond in addition to your normal monthly installments, put it there!! This reduces your interest (did you even see what Zuma did during December to Nene it’s affecting us now- via interest. The NAAT) and some banks allow you the option of drawing the money out of your bond as long as you include it as a feature on the bond (at a small additional fee. It pays for itself, really).
I learned from my parent’s mistakes. I watched them lose everything and drown in debt thanks to oodles and oodles of store cards. My husband and I do not have store cards as a result of this. You want to control your debt. Not the other way around. The more debt you have, the more you are forced to work and work hard. Work harder for longer because… you’re a slave to your debt. Don’t start the cycle. Remember what’s important. *The option of retiring at 40*. You can totally achieve this!
I understand that according to my parents’ generation, working in the corporate world was the biggest representation of success. Working for a company for 30+ years was the ultimate perception of having everything ‘together’ in your life. I beg to differ. I sit here in this company where I SEE the 20+ years working-crowd. I listen to their regrets about having missed the best times of their kids’ lives. About how their spouses reared their kids, about how, yes, MATERIALLY they were able to support their kids. Sure it’s not the same for everyone. But I am just sharing what I have been seeing. Use it, don’t use it. I’m putting it out there.
Do I want my daughter to have the best things materially? Naturally. But not at the cost of the true things of substance – a good, healthy relationship with her mother and father. Parents who don’t work around the clock and miss out on her life (the thing we are currently doing :(Hopefully not for too long ). I am a failure. Don’t be me.
Here’s to all of us, not perpetuating the cycle of debt and losing quality time with loved ones. Here’s to us Making it All Happen, making the right people number One in our lives.