By TKay Nthebe
Graduation season is an exciting time because the many sleepless nights and financial sacrifices finally come full circle. This is a new opportunity to start afresh and build a career, where some graduates will start internships, graduate development programs (GDP) and/or start businesses. As this new chapter unfolds, it is important to master lessons on managing money and avoid making the same financial mistakes some of us made.
- Set financial goals and plan
To succeed financially, start by defining the financial goals you’d like to achieve and develop a financial plan to achieve them. As discussed in the article titled “Get your head in the game” ensure that your goals are specific, measurable, attainable, realistic and time bound (S.M.A.R.T), followed by a plan and implementation.
- Plan and avoid the lifestyle inflation
The second step is to manage the transition from the NMDS allowance to a salary. Earning more income and changing the lifestyle can be exciting, but if not managed well things can spiral out of control. Graduating from an average monthly income of LSL 1,100.00 to LSL 4,500.00 for example will afford you a better lifestyle – “beke le beke” and buying the things you’ve dreamt off; the question should always be – what is the “ncaa” thing to do with your money. So, have a spending plan, tell your money where it should go, live within your means, and maintain a balanced lifestyle.
- Put money away for the future
The myth young people have is that you need to have a lot of money to start saving. This is NOT true! With your first income, pay yourself first, commit and put away at least 15% for example, say you earn LSL 2,000.00, then put away LSL 300.00 in an interest-bearing account and reap the rewards of compounding interest. If you do not have LSL 300.00 however, you can also start with just LSL 100.00, increase it regularly and be consistent. You also do not need a reason to save money – save for the sake of saving and make it a habit.
- Understand how debt works and avoid being highly indebted
You will be tempted to take debt – to buy a car, site or pay for “lobola”. Understanding how the different lines of credit work, their advantages, and disadvantages. Educate yourself on additional costs associated with taking debt, interest rates and credit life insurance as discussed in the article “Are you managing your debt or is it managing you?”. Equally important is to have a plan to start paying back the NMDS loan.
You will also receive requests from family and friends to take loans on their behalf, learn how to set financial boundaries and have difficult conversations so you do not end up in a financial mess.
As you step into this new and exciting era of your life, take time to reflect on your financial goals you’d like to achieve and who you want to be. Work hard, be money savvy and take care of your finances. Congratulations on this milestone!