The life you are living today is, largely, because of the choices you made yesterday, and the life you will live tomorrow will be determined by the choices you make today.
You can improve the quality of your life tomorrow, by making better quality choices today. One way to do this is by learning how to manage your money better – by improving your financial literacy.
Have you ever thought about how much money you will earn in your life?
If you earned R10 000 per month then you would earn R120 000 per year. In two years you will earn R240 000. In five years you will earn R600, 000, and in ten years you will earn R1,2 million. Over a 40 year career you would earn 4,8 million (in today’s money).
Most people in a reasonable job will earn a few million rand over the course of their careers. After tax you are free to do with your money as you please.
The ups and downs of saving
The average South African saves less than 2% of their income. If we consider that most middle class South African’s will earn a few million Rand during their careers, we have to wonder what choices are responsible for the fact that we save so little.
One culprit is impulse purchases. We have all had the experience of walking out of a shop with something we did not plan to buy. The layout of a retail shop is cleverly designed to temp us to spend more than we had planned to spend whenever we set foot in the door.
An enormous amount of time, effort and money (billions of Rand) has been spent on studying the way we think during our moments of choice as we walk through a shop. That knowledge is then used to create clever marketing strategies around those ‘moments’ of choice which are designed to increase the likelihood that we will leave our money with ‘them’.
We as consumers have, by comparison, spent very little time, effort and money figuring out how to keep our money. The system is stacked up against us.
Making better choices
Over the course of your life you will make many financial choices. Should you buy the expensive branded clothing or the less expensive option? Should you take out a loan and buy the furniture now or should you wait until you have saved enough and then pay cash?
Should you buy take-aways or should you make supper at home? As you make these choices over the years you are shaping your financial destiny.
If you want to get ahead you need to design a plan for your money, or else you will, by default, follow the plan that someone else designed for your money – and they have a plan because they know that you will earn a few million rand in your lifetime and if they can secure some of that each month then they have a good business!
Whether or not you become financially independent, and live the life you choose will be determined by the choices you make. Becoming financially literate will improve the quality of those choices.
Ideally we should learn how to handle money when we are young, but few people become financially literate in their youth. Salaries also don’t come with user-manuals.
It is, however, never too late to learn because, while you cannot change the past, you can change the direction of your future. Learning to make smarter financial choices can improve your future.