Scotia Investments

Financial Learning Centre

Scotia Investments Financial Learning Centre

Money Management Guide - Are you Prepared?

School days are over; you are now in the working world. You are a professional, earning big bucks and finally able to afford at least some of the "prized" possessions you were unable to as a lowly member of the student population. But before you go on that next big spending spree, take a second to stop and realize that you are no longer a child; you are now an adult responsible for your future.

Many young adults suddenly find that they have turned into middle-aged adults with no house of their own, no education plan for their children and no retirement plan for themselves. No one wants to be in this situation. I am sure that most of us start out thinking we will never be in this situation, but the fact is, without careful planning and the exercise of some amount of restraint, that may just be the path you are on.

You may say you are young! Carpe Diem! Seize the day! You want the bling jewelry, the bling clothes, the bling car. In addition, you also have more wholesome desires, you want to have a comfortable home, children whose lives will be enriched, and the ability to retire comfortably at an age that you can still enjoy the freedom that comes with retirement. Not to worry! All these goals are attainable. Determine what your goals are and the time frame within which these goals are to be realized. Now, it's time to BLING!

Budget

Prepare a detailed budget. For one month, write down all your expenses. Look at these expenses and categorize them. We sometimes do not realize how much we spend until we see it on paper. This is a great way to determine how much you have been spending, and on what. You may be surprised to find that you are spending up to 25% of your income on entertainment, clothing, etc.

Now that you have your expenses in perspective, determine where you can make cuts without drastically changing your lifestyle. Next, determine how much you can realistically save on a monthly basis.

Limit

Having prepared your budget, stick to it. Limit yourself to spending only within the constraints of your budget. Developing good spending habits is an important prerequisite to financial success. By limiting yourself now, you will be able to achieve more important objectives later.

Invest

Speak to an investment advisor who can help you refine your budget and structure a portfolio of investments for you, given your goals and time horizon. Those monthly expenses of $7,000 on parties, $8,000 on clothes & shoes, the extra $5000 you opt to pay monthly for that fairly new car rather than the less expensive older model, all add up to $20,000 per month. This amount, if invested in a portfolio of government securities and stock market investments, could grow to J$1 million in 3 years.

Nirvana

Do not resign yourself to being a novice. Do your own research, aim for nirvana - that highest state of knowledge and understanding. Your investment advisor will guide you, but you should also have an appreciation of your options and how they suit your needs. So ask questions and make sure that you are comfortable with the options presented. These options should reflect your profile:

Grow

Having put together your portfolio of investments, take comfort in the fact that you are well prepared for the future. Relax and watch it grow. And, should you realize some unexpected gains, go ahead, splurge! BLING!