1. Start tracking your expenses - Know what you
are spending on. We bet you will be surprised at the amount you think you are spending
versus the amount you actually spend. Then use our Expenses & Savings Tracker to keep a tab on your expenses
on a monthly basis.
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2. Remain within a budget - If you don't already
have a monthly budget, make one. Make sure your expenses are within this budget.
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3. Pay off debts first - Especially pay of your
credit card debts. Credit card companies charge large amounts of interest (in the
range of 30-40% p.a.) on amounts unpaid at the end of the 30-day credit period.
Compounding interest on credit card debt can take a nasty turn. In addition it can
spoil your credit history for a much more serious loan that you might require later
on, for say a house. Use your savings, to pay off the debt with the highest interest
rate. If the savings you have invested are earning you 7% and the interest rate
on your debt is 10%, paying off the debt is an obvious choice, isn't it?
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4. Diversify. Understand the need for asset allocation
- They call this the only "free lunch" in finance. This is the most fundamental
thing you need to know about investing. You must have heard the phrase "Don't put
all your eggs in one basket". Asset allocation is just that. It's about balancing
your investments so that risk is minimized. Learn more about asset allocation.
It's by far the most important thing to know in your quest for wealth.
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5. Start investing in equity - Historically,
the longer you remain invested in equity markets, the greater are your chances of
making some serious money. Our advice, therefore, is to start investing in equity
at this early age.
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