Transitioning To The World Of Work
by Chinmay Ananda, Finance Academy Australia
Always make more money than you spend
To know if you are making more money than you are spending, first you need to know how much you are spending. Remember, this shouldn't be a guess or an assumption. You should know the exact dollar amount.
It's important to know the cost of your living expense such as rent, bills, travel and food. This includes only daily or monthly recurring expenses, not new clothes or entertainment. Aim to have this expense between 35 – 45 per cent of your total earning.
Any money spent on clothes, entertainment or holiday shouldn't exceed more than 10-15 per cent of your earnings. You will be doing yourself a huge favor by keeping this money aside as savings instead.
Finally, make sure 40 per cent of your earnings go to your savings account or part of it to any investments. Remember, life is about running a marathon, and not always sprinting!
Invest in a money mentor
Have a mentor who can hold you accountable for your financial goals and remember to choose someone who is not your friend or family member.
My own mentor used to always tell me – have a goal in front of you and a guru at your back.
It is very easy to fool ourselves and justify our inactions; so surround yourself with mentors who can see more in you than you can see in yourself
Make sure you spend on assets that bring good returns
When money goes out of your pocket, it either becomes an -expense' or creates an -asset'. So make sure you spend on assets that bring good returns.
For example, if you are in a rented property you will be pay rent to the landlord (money goes out of your pocket that becomes an -expense'). If you have taken a home loan from the bank, you will be paying EMI (Every Month Instalment). In this case money is again going out of your pocket, but it is creating an -asset'
For more information on Doxa and its programs, visit www.doxa.org.au.