If you are born poor its not your mistake. But if you die poor its your mistake. – Bill Gates
To get our financial foundation right, you will need to avoid these 5 common mistakes and set your financial foundation right from the moment you start working.
- Never Spend a Full Paycheck
Use the 80:20 or 70:30 rule to condition your spending and save 20 or 30% of your paycheck to build your emergency fund which is about 6 months of your salary put aside. Start Saving from young!
- Don’t Buy a New Car
Get this right from young a car is a depreciating asset, Period! Unless you are flush with cash or a high paying job! Don’t get tied down with a big car instalment right after college or university. Look around for a decent 3- to 5-year-old second-hand car until you get your 6 months emergency fund build up.
- Make Smart Investments
First smart investment I did was to get my medical insurance and the basic insurance packages I needed to protect myself and loved ones. The smartest first investment is to get yourself insured because you are stepping into the working world, you are your biggest asset! Get Protection!
- Don’t Gamble with Your Money
Other than the occasional and seasonal TOTO draws to try your luck! Gambling is a NO NO when you step out to work!
- Don’t Buy a Big House
Biggest Mistake most do when they just start working is getting themselves bogged down with their dream car and big house instalment! Your first house should be an investment house if you are starting on this journey, and the right first house could set you on your path to get your dream big house along the way. Financial Freedom is built from delayed gratification!
LIC Editor
Learning Investors Community – Series 2