“Youth is deceptive, when you are young, you think you have all the time in the world, youthfulness does not make you realise that time really does fly. At 25, you are just 15 years from being 40. Make hay while the sun of youth shines.” – Charles O. Anyiam-Osigwe.
In youth we think, finish secondary school, go to university, get a good job, advance in our chosen career, earn much more as we advance and thus have a sizeable disposable income.
- Get a good job – Not as easy as it seems
- Advance in career – Not easy either
- Earn more – Again, not that easy either.
- More disposable income to spend as one pleases – Definitely no for most people in our economy.
And, as you grow up, you begin to live your life – with responsibilities. You:
- Get married
- Get a mortgage or save to build your own home
- Get life insurance and other insurance covers
- Have children
- Run your home
- Pay for your children to go to school
BILLS, BILLS, BILLS AND MORE BILLS. Yes, it becomes a “struggle” to make ends meet.
Time is passing and you are nearing retirement, but you have not made any proper plans for this and truly not through any fault of yours but the realities of life and living. This is where understanding money and forward planning when you are young, footloose and fancy-free comes into play.
- Discipline and value for money. Money is an instrument of exchange and should be spent for the daily necessities of life. However, it is good to come to the early realisation to be disciplined and not be quick to indulge on every fad and want – to apply monies to what is needed and necessary and not spend on impulse.
- Discipline also comes into play in your working life so that you apply and conduct yourself properly by being punctual at work, courteous and completing tasks set for you effectively and on time. This way you earn the respect of your peers and managers and set yourself on the road to rapid promotion and increased earnings.
- No matter your income, you must develop a savings culture by setting aside religiously a minimum of 10 percent of your earnings. Even though it is now mandatory for most companies in Nigeria to have retirement schemes for their employees, you should save money on your own. Money is never enough for what we have to do with it, so it takes discipline to make the effort and ensure we save a minimum of 10 percent of what we earn and manage what we have leftover for our expenses.
- Develop another source or other sources of income. Some people, apart from the 10 percent they set aside fastidiously as savings, go further to save an additional 5 or 10 percent of their income towards setting up another income stream, for example for investment in the stock market or a business venture. The advice when the target sum is reached is to seek good professional advice before putting your hard earned savings into the stock market or a business.
- For you to go through life and retire comfortably does not just happen by chance, it takes discipline and forward planning.
- A good rule of thumb to know how much you will be able to live on during retirement is the 4 Percent Rule, which states that you should withdraw 4 percent of your retirement portfolio in the first year of retirement. Each subsequent year you should do the same while adjusting for a 3 percent inflation rate.