10 things I wish I knew about money when I was younger

Hindsight is a true gift. A lot of us look back to our early years and wish we’d done things a little differently. Particularly, the way we managed our finances. This could be because many of us might not have had access to the right information. We’ve put together a list of important things we all wish we’d known earlier:

1. Consistent savings, no matter how tiny, adds up quickly for future plans like a car or a house. Decide on a fixed amount to save every month and automatically transfer from your current account to savings account like the Saadiq XtraSaver Account, where your savings can also earn profit up to 1.5% p.a. Treat this as a fixed expense so you don’t let your savings allocation drop.
2. Always have a Safety Net.  Set aside some funds and work towards at least 6 months’ worth of living expenses that is readily available for emergencies.
3. Allow yourself a Fun Fund. Open a savings account that is easily accessible for short-term purchases, like a video game console, bag or a holiday getaway
4. Buy only what you can afford. A solid piece of advice when creating a budget is to follow the 50/30/20 rule. 50% on expenses (rent, car, gas etc), 30% saved and 20% on indulgences. If what you earn just covers your basic expenses, perhaps your basic expenses are too high. Figure out how you can cut them down by choosing less expensive housing, sharing a flat, taking public transport etc.
5. Insurance is cheaper when you’re younger. When it comes to timing, the younger you are when you buy life insurance, the better. This is because at a younger age, you'll qualify for lower premiums. And as you get older, you could develop health problems that make insurance more expensive or even disqualify you from purchasing a plan. In an unfortunate event, you are ensuring that your loved ones will be able to sustain the lifestyle you have started for them.
6. Learn about investing. Investing doesn’t have to start big. Take a class or watch videos online or talk to one of our Wealth Specialists. The only way to make sure your money grows is by putting at least some of your cash in long term assets (like mutual funds & bonds) that will grow faster than inflation.
7. Never invest in anything you don’t understand. Otherwise, you won’t know what you’re buying; you won’t know when to sell; and you can’t accurately evaluate the advice you’re given. Don’t be afraid to ask questions and don’t accept anything until you’re convinced. Read all the terms and conditions.
8. Don’t put off investing. Investing doesn’t have to be about huge sums. You can start with as little as AED 500 and invest monthly. The earlier you start, the better. 
9. Don’t be overly conservative.  The younger you are the more risk you can take (provided you are debt free).  Without some risk, you may miss out on the gains you need to grow your nest egg. A general guide is to hold a percentage of higher risk assets equal to 100 minus your age. So, for a typical 20-year-old, 80% of the portfolio should consist of higher risk assets such as equities and the rest would comprise of lower risk assets such as bonds, government debt etc
10. Understand the need to diversify – a simple savings account may be safe and easily accessed but won’t offer the high returns you need. Other products such as insurance linked to investments can offer higher returns but can’t be accessed easily in case you need the money. To achieve a balance between security and flexibility, an allocation to a diversified basket consisting of stocks, bonds and precious metals etc. is the way to go.

To summarise, aim to be financially independent. Try to be free from debt and seek a professional’s guidance if you need it. You don’t need to be a millionaire to have a financial plan.

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