5 things to know about personal finance

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You are never too old or too young to start taking care of your finances

It does not matter if you have an after-school part-time job or are a pensioner living on a government pension, taking care of your personal finances should be a top priority!

Here are 5 things everyone should know about personal finance:

#1    Learn about TMV (time value of money)
TMV (or time value of money) which is a concept whereby a core principal of finance states that provided money is able to gain interest, any amount of money is worth more now than in the future.
Simply put if you get $50 today and invest it, it will be worth more than that in a years’ time because of interest gained, etc.  But if you got $50 in a years’ time due to money-losing value throughout the year, it will be worth a lot less.

#2    Invest, invest, invest!
For younger people, you should always try to start investing as soon as you can, even if it is a minimal amount.  You can increase it as you can afford to, but it is good to get into the habit of doing so and even better to start building your nest egg sooner rather than later.

#3    Be smart with your money and let it do the work

Be smart with your savings and investments, a good investment and or saving plan could have your money earning for you!  If you could save $100 000 a year with a 10% investment return you are already earning an extra $10 000 a year for doing nothing more than having your money invested.

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#4    Avoid credit where ever possible or at least learn how to make it work for you
Learn about credit before you go taking out loans and credit cards, although a credit card if managed correctly could work for you but managed incorrectly can be quite a costly affair as can loan and store card accounts.  It is always best to ensure you have a great budget and that you know you can afford the monthly repayments of your debt.  Always try to pay any debt off as soon as possible to avoid high-interest rates and the risk of not being able to pay them back at all in today’s unstable climate.

#5    Create and maintain a budget

Most importantly of all is knowing how to create a budget.  Most people hate having to do their personal finances, like balance their chequebooks or do a budget but it is the best way to be able to manage your finances and create projections for various events in your future.


Your personal finances may seem like a pain to have to do each month but at the end of the day it ensures you are able to live, pay your bills and maybe even get to take a holiday or two, buy something you really want because you took the time, made the small sacrifices and kept your affairs in order.

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