Youths Are Losing Out On Creating Wealth For Themselves
Technology has granted the youths access to make money. However, it doesn’t end in making money.
Fascinating research by the Journal of Positive School Psychology revealed a lot of insights into the youth’s spending pattern:
“Today’s youth are growing up in a debt culture assisted by an expensive lifestyle and easy credit card creation and use.”
With social media and easy financial transactions (thanks to technology), youths are losing out on creating wealth for themselves.
Unlike the good old days, our parents, guardians or grandparents had stable jobs and were assured of getting pensions.
However, in recent times, governments and regulators are moving away from guaranteed pensions, and firms are moving away from offering lifetime employment.
That means that we can’t rely on the strategies that worked for our parents, or the folks from Generation X, because those strategies don’t work anymore. While it may be helpful to some extent, the information may be outdated, lacking, or incorrect.
In this article, we’ll be sharing the importance of having a money plan (with a focus on young people) and tips needed to find a money plan that suits you and your needs.
What is financial planning?
Financial planning determines how much money you need to earn, save, and spend and how much you need to make, invest, and spend. You can manage your finances and achieve your life goals by planning your finances.
Why does it matter?
Robert Kiyosaki, the author of Rich Dad, Poor Dad, opined, “It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.”
Financial planning gives you an edge in life. It helps you manage your income, avoid debt, and save yourself from unforeseen circumstances.
You might claim to be a saver, but without a documented financial plan, your saving is akin to wandering without a map.
Creating a financial plan
Now that you’re enlightened on the importance of financial planning, how can you create one for yourself?
Know where you stand
How do you feel when you wear loose underwear? Uncomfortable? Less confident or distraught?
You’ll agree with me that knowing your perfect size does a lot of good for you. The same goes with money planning.
Tosin of Money Africa once tweeted: Money is like underwear. You have to get a plan that’s good for you.
Understanding your current financial situation is the first step in developing a financial plan.
When you compare your income and expenses, you can see your cash flow and where your money is going. This will serve as the foundation for your financial plan.
Set your goals
Setting financial goals is the second step in the financial planning process.
Your financial objectives should be specific to your situation and reflect where you want to be in the future. Given your financial situation, the goals you set should be attainable.
Furthermore, it is critical to establish both long-term and short-term objectives.
Some common objectives include: Planning for a second degree, saving for retirement, investing in real estate, etc.
The next step is to assess the importance and priority of each financial goal and the length of time each plan is expected to take.
Plan for the future
The next step is to devise a strategy for achieving your financial objectives.
For some, meeting financial goals may simply mean continuing on their current path. Others will need to change their lifestyle or outlook to achieve their financial goals.
It’s also important to examine your income and expenses. There are probably some areas where you can cut costs to better allocate your funds. Simple steps like cooking at home and declining expensive outings can quickly add up.
Always review your financial plan
You should always update your financial plan on a regular basis. Take the time to review your savings and investments on a regular basis to see if they are on track to meet your savings goals.
Consider whether your current level of risk is providing the expected returns, and make any necessary adjustments.
What step are you taking now?
Life’s complexities are unpredictable. It’s important to arm yourself with several finance skills so you can do better with your money.
Remember that a lack of financial knowledge is primarily to blame for bad financial decision-making.
In the words of Frank Samuel, founder of Financial Fitness Clinic, “If you know better, you’ll do better.”