Start with these 4 points to financial intelligence early in life. Thank yourself later.
I met a person on the way to work.
I was at a convenience store, about to buy the usual coffee to energize me throughout the day. I stayed for a bit in one of the tables, seated just right beside him. While preparing my coffee, I could not help but take a peek at what he was doing.
He was looking at an overdue bank statement.
You probably know how this works. You take a loan from the bank. Whatever that amount is, you have to pay. Unfortunately, the man beside me didn’t. Who knows what's going to happen when you are blacklisted by the bank. Not to mention that it seemed him and I were just the same age.
Like most people in their mid-twenties, I spent much of my time and effort doing (other people's) work, watching TV, and all those projects I started but never finished. You can say that fateful meeting at the convenience store is now forever etched in my memory. Fortunately, I already took some steps to be financially independent in my old age, but I still worry that I might end up like him. While it varies from one person to the next, let me share with you some key points in order to live a financially independent life when you grow old.
Point A. Keep your job, at least for now.
You might be sitting in an office desk right now, reading this article from a website you are not supposed to visit during office hours. My point is that - the job you have right now, keep it. You are not yet financially able to quit the corporate world, and live for the rest of your life in Penang. You can say that your job is your most stable source of financial income. Keep it, and save at least 3 months of your salary. In that way, when you finally quit, you have enough cash to stay afloat and try new things. Of course if you are still supporting your family, your cash reserves should be at least higher.
Point B. Get a savings account
If you haven't done yet, save your money in the bank. Some people will say that with a savings card, you are basically losing your money to the bank and to inflation. But, you don't have to worry about that and all the other complicated details at the moment. What's important is that you have your money, or savings kept somewhere. That's a great start.
Point C. Have an emergency fund
Soon, the bank will offer you a credit card, or you'll get a credit card yourself. It is a convenient way to purchase items on instalment basis, giving you enough purchasing power to buy the things you want. But don’t overdo it and make sure you have the capacity to pay for it, research first the banks that offer credit cards before settling with one, and do not spend beyond your means.
Which brings me to having an emergency fund. In those extreme instances that you want to buy something, having an emergency fund will make certain that you don't use your credit card for it. Also, in the event that your family needs cash for unforeseen circumstances; you have enough reserves to cover for it. You would not want to use your credit card to pay for anyone’s hospital bills.
Point D. Create your own financial goals
We all want to be rich and contented. We all want to be financially free. However, we need to write down what we really want. Jot down specifically your goals, your aspirations. Do you want to switch careers? Write it down. Would you like to have your own business someday? Write them all down, along with how much you think it will take to achieve them.
By doing this, you are creating a strong mindset, and your subconscious will make you realise that you need to expand your horizons. Soon, you'll realise you deserve something better, and you will strive hard to achieve them.
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I looked at the man from the convenience store, as he slowly tucked away his credit card statement with overdue bills. He got up, proceeded to the counter, and then asked for a pack of cigarettes.
Wait, weren’t cigarette taxes raised recently?