Take advantage of time and compound interest by investing at a young age.

As June is National Youth Month, the SunTeam spoke to head of financial education at Old Mutual John Manyike to get advise for young people.

Manyike said now is the best time for young people to start building the right money foundations.

“That will ensure a better, more prosperous future for themselves, their families and their futures,” said Manyike.

He said over a third of Mzansi’s population are young people under the age of 35. With about 66% of them being unemployed, it becomes even more important to encourage those that are employed, or have started their own businesses, to look at the benefits of effective money management, savings and investing.

Manyike said financial literacy must not be underestimated.

He said although it may feel strange to be thinking about the financial building blocks you will need during your life and even about retirement, it’s vital to make wealth creation a priority.

Manyike said compound interest helps you earn a higher return on your savings and investments.

“Think about compound interest a bit like what happens when the ‘snowball effect’ occurs.

“A snowball starts small, but the more snow that’s added, the bigger it gets. As it grows, it becomes bigger at a faster rate.”

But where to start?

1) Start and Stick To Your Budget

The best way to be the boss of your money is by keeping track of your means and meeting your financial obligations and goals. Apply the 50/30/20 rule , where 50% of your income goes to essentials, 30% on what you want, and 20% on savings, investments, and retirement funding.

2) Pay Yourself First

Ensuring that money for long- and short-term savings is taken off your pay cheque before you begin spending will prevent the urge to buy that pair of new takkies. These funds will benefit from the magic of compound interest and automatically grow.

3) Enquire About Retirement Annuity

Speak to a financial adviser about a retirement annuity. Acquiring an RA means committing yourself to funds that you can only access after you reach the age of 55. The advantages of RAs are that they’re tax-efficient, and when you retire you’re entitled to a tax-free payment of up to R500 000 from the accumulated funds.

4) Protect yourself and your assets

The best time to buy insurance is when you’re young. Premiums are primarily based on age, so the younger you buy a policy, the more coverage you can afford and the cheaper your premiums.

For most, your 20s and early 30s are the most exciting formative years of your life. They’re about finding yourself, enjoying freedom, learning, buying what you want as well as hopefully building a prosperous and sustainable career.