Maryanne Leicher, Financial Planning Specialist at Chartered Wealth Solutions. (Image: Supplied)
By Maryanne Leicher, Financial Planning Specialist at Chartered Wealth
You’ve graduated, landed your first job and you’re finally earning a regular income – maybe even juggling a side hustle. It’s an exciting time, but also one where your financial decisions can shape your future. Many young professionals fall into the same traps early on. Here’s how to avoid them and set yourself up for success.
1. Spending more than you earn
It’s easy to get carried away when the pay cheque arrives – new clothes, nights out, gadgets. But if you’re spending more than you earn, you’re building a lifestyle on debt.
Stick to the 50/30/20 rule:
- 50% on needs (like rent, food, transport).
- 30% on wants (entertainment, lifestyle).
- 20% on savings and investments.
Track your spending for a month and be honest about where your money goes. Then draw up a budget you can actually live with – and stick to it.
2. Delaying investment
It’s tempting to think you’ll start saving “when you earn more”. But the earlier you begin, the more time your money has to grow.
Open a tax-free savings account or a retirement annuity and set up an affordable debit order – even R500 a month makes a difference. Build an emergency fund covering three to six months of expenses. Life happens, so be ready for it.
3. Falling into the debt trap
Credit cards, store accounts and personal loans seem helpful at first, but they’re expensive and easy to overuse. If you have any of these, pay them off as quickly as you can. Think of debt as reverse saving – where interest works against you.
4. Buying a car you can’t afford
Flashy cars on flexible terms might seem like a rite of passage – but they’re also one of the fastest ways to derail your finances.
Use the 20/4/10 rule:
- Put down at least 20%.
- Keep the loan term to four years.
- Keep total car costs under 10% of your income.
5. Saving without a goal
When savings don’t have a purpose, it’s easier to dip into the pot.
Whether it’s a deposit for a home, further studies or a dream trip – knowing what you’re saving for keeps you focused.
6. Impulse spending
We all fall into the trap of “retail therapy” now and then. Wait a day before making a big purchase. If you still want it, go ahead. Most impulse buys lose their appeal after a night’s sleep.
7. Taking financial advice from social media
There’s no shortage of financial influencers, but few are qualified. Rather partner with a certified financial planner. Personalised advice beats one-size-fits-all tips every time.
8. Mixing personal and business finances
Starting a side hustle is great – but blurring the lines can lead to a mess. Track your business income and expenses properly. A side hustle should support your goals – not derail them.
For many young people, the shift from being a student to earning a salary creates a false sense of financial freedom. It’s easy to feel secure – until the bills, debt and lifestyle costs catch up.
We live in an age of instant gratification, but one of the smartest financial habits you can adopt is delaying that gratification. It’s a muscle – the more you flex it, the stronger it becomes.
Wealth isn’t built overnight. It’s built over time, one decision at a time. For more information, visit www.charteredwealth.co.za.