Some financial tips for the young

If you think that understanding personal finance is way above your head you are wrong. All it takes to get started on the right path is the willingness to do a little reading - you don't even need to be particularly good at maths... Unfortunately, personal finance has not yet become a required subject in high school, so you might be fairly clueless about how to manage your money when you're out in the real world for the first time. If you think that understanding personal finance is way above your head, though, you're wrong. All it takes to get started on the right path is the willingness to do a little reading - you don't even need to be particularly good at maths. To help you get started, we'll take a look at eight of the most important things to understand about money if you want to live a comfortable and prosperous life. 1. Learn Self Control If you're lucky, your parents taught you this skill when you were a child. If not, keep in mind that the sooner you learn the fine art of delaying gratification, the sooner you'll find it easy to keep your finances in order. Although you can effortlessly purchase an item on credit the minute you want it, it's better to wait until you've actually saved up the money. Do you really want to pay interest on the purchase? If you make a habit of putting all your purchases on credit cards, regardless of whether you can pay your bill in full at the end of the month, you might still be paying for those items in 10 years. If you want to keep your credit cards for the convenience factor or the rewards they offer, make sure to always pay your balance in full when the bill arrives, and don't carry more cards than you can keep track of. 2. Take Control of Your Own Financial Future If you don't learn to manage your own money, other people will find ways to (mis)manage it for you. Some of these people may be ill-intentioned, and others may be well-meaning, but may not know what they're doing. Instead of relying on others for advice, take charge and read a few basic books on personal finance. Once you're armed with personal finance knowledge, don't let anyone catch you off guard - whether it's a significant other that slowly siphons your bank account or friends who want you to go out and blow tons of money with them every weekend. Understanding how money works is the first step toward making your money work for you. 3. Know Where Your Money Goes Once you've gone through a few personal finance books, you'll realise how important it is to make sure your expenses aren't exceeding your income. The best way to do this is by budgeting. Once you see how your morning coffee adds up over the course of a month, you'll realise that making small, manageable changes in your everyday expenses can have just as big an impact on your financial situation as getting a pay rise. In addition, keeping your recurring monthly expenses as low as possible will also save you a lot of money over time. If you don't waste your money on a fancy apartment now, you might be able to afford a nice house before you know it. 4. Start an Emergency Fund One of personal finance's oft-repeated mantras is "pay yourself first". No matter how much you owe in student loans or credit card debt and no matter how low your salary may seem, it's wise to find some amount - any amount - of money in your budget to save in an emergency fund every month. Having money in savings to use for emergencies can really keep you out of trouble financially and help you sleep better at night. Also, if you get into the habit of saving money and treating it as a non-negotiable monthly "expense", pretty soon you'll have more than just emergency money saved up: you'll have retirement money, holiday money and even money for a down payment on a home. Don't just hide this money under your mattress; put it in a high-interest online savings account, a term deposit or seek advice on how to invest it in equities. Otherwise, inflation will erode the value of your savings. 5. Start Saving for Retirement Now Just as you headed off to kindergarten with your parents' hope to prepare you for success in a world that seemed eons away, you need to prepare for your retirement well in advance. Because of the way compound interest works, the sooner you start saving, the less principal you'll have to invest to end up with the amount you need to retire, and the sooner you'll be able to call working an "option" rather than a "necessity". 6. Get a Grip on Taxes  It's important to understand how income taxes work even before you get your first paycheque. When a company offers you a starting salary, you need to know how to calculate whether that salary will give you enough money after taxes to meet your financial goals and obligations. Fortunately, there are plenty of online calculators that have taken the dirty work out of determining your own payroll taxes. These calculators will show you your gross pay, how much goes to taxes and how much you'll be left with, which is also known as net, or take-home pay. 7. Guard Your Health  If meeting monthly health insurance premiums seems impossible, what will you do if you have to have surgery and don’t want to join the queues in the public health system. If you're uninsured, don't wait another day to apply for health insurance; it's easier than you think to wind up in a car accident or trip down the stairs. You can save money by getting quotes from different insurance providers to find the lowest rates. Also, by taking daily steps now to keep yourself healthy, like eating fruits and vegetables, maintaining a healthy weight, exercising, not smoking, not consuming alcohol in excess, and even driving defensively, you'll thank yourself down the road when you aren't paying exorbitant medical bills. 8. Guard Your Wealth If you want to make sure that all of your hard-earned money doesn't vanish, you'll need to take steps to protect it. If you rent, get contents insurance to protect the contents of your place from events like burglary or fire. Disability insurance protects your greatest asset - the ability to earn an income - by providing you with a steady income if you ever become unable to work for an extended period of time due to illness or injury. If you want help managing your money, a fee-for-service financial planner to provide unbiased advice that's in your best interest is the way to go, rather than a commission-based financial adviser, who earns money when you sign up with the investments his or her company backs. A Financial Basis for Life Remember, you don't need any fancy degrees or special background to become an expert at managing your finances. If you use these eight financial rules for your life, you can be as personally prosperous as the person with the hard-won MBA. Source: by Amy Fontinelle | Investopedia.com