Let’s say you are a young professional working for a well-established company and paid a flattering salary plus some deal-commission benefits. Perhaps you hold a supervisory level at work which equates to a superior salary – the kind that pulls your purchasing power, lifestyle, and thus your bragging rights to a level over many others of your age. Not to mention additional perks such as company car, staff housing, clothing and phone allowances. Lastly, no family of your own to feed. You basically have your money all to yourself. So you think you can splurge? Of course you can. Your money, your rules.
But here are three painful reasons why you can’t splurge.
1. Big salary is not unlimited salary
Big salary is big and it’s going to seem big enough to afford for you everything you want. On pay day, your credit card would be at its wealthiest state and you would feel – lo and behold – AWESOME!!! It works like drugs – possessing a newly salary-loaded payroll ATM card. You would want to hit the malls, grab those limited edition gadgets, and go on a (debit card) swiping spree. You would notice you are becoming that controversial one-day millionaire but you keep swiping your card anyway as if the money is unlimited. But before the next pay day arrives, you will have realized that the seemingly unlimited swiping spree is about to expire and you have to keep your card away from the cashier.
2. Lifestyle will catch up and beat you bad
It’s usually inevitable. As your purchasing power grows, so does your living standards. You would want to collect signature brands for your better wardrobe, the latest smart phones and their coolest accessories. As soon as possible, you would move to a comfortable house, not necessarily more spacious but with more amenities which make the property even more expensive. You would prefer to shop at luxury department stores and supermarkets. There would be more high-end Friday and weekend parties to attend and more five-star or fine dining occasions to be at. There would be more gift-giving to more friends – luxury gifts at that because what you give is a statement of what you can afford. And of course, more out-of-town weekend getaways with friends, out-of-country vacations with family, and random staycations. Life would definitely seem better in general, even more grandiose on your social media pages. But, fact is, your credit card has barely been on vacation.
3. Emergencies are lurking around and retirement arrives sooner than you think
And while your credit card is busy accommodating your luxuries, travels, and your shopping spree, emergencies arise when you least expect it. The thing is – Do you have an emergency fund? Most young professionals bother setting aside for the travel fund more than they do for the emergency fund. But what they remember the least is the retirement fund. It may be true that retirement is a thing in the far future, but it is also true that most retirees don’t enjoy all the perks of retirement. They are rather like, “I thought I could just…splurge!” They should’ve known better. The good news is…you still have time.
Learn better finance habits. Fix your spending. And start building your emergency savings.
Visit us at www.ouds.co.za or call us at 079 9800 822 and let us know how we can help you.