What accounts do I need?
To get going you should have the following 4 basic accounts set up:
This account should be in the form of a money-market or savings account with the highest possible interest you can earn. In case of a money-market account make sure that the funds are readily accessible and not tied up for a lengthy period of time. Rather sacrifice higher interest for quicker access.
This account needs to be built up to an amount at least equal to 3 to 6 months of your monthly expenses!
The idea here is to have funds available should something happen that you did not plan for like losing your job/income for whatever reason.
This will give you peace of mind that should something unplanned happen you will be in a secure financial position for at least a while so that you can plan your next move.
The savings account is used to accumulate funds with the intention of spending it at a later date.
Again get an account with highest possible interest you can earn.
The idea behind this account is twofold. Firstly to get you into the habit of saving for something that you would like to purchase like that big TV you cannot possibly live without. Save for it and purchase it cash! Do not under any circumstances give into instant gratification and purchase it on credit. This is a sure way to destroy wealth and keep you in the rat race.
Secondly, delayed gratification often actually leads to a point where the initial excitement of getting something new fades over time and you might not want it at all in the end. Try it out. Next time you want to purchase something take note of your emotions/feelings at that time but do not make the purchase. Wait for one week and then take note if the urge is still as strong as the first time you saw what you wanted to buy.
The title might be misleading. The plan here is to open an account on a platform that enables you to purchase shares.
This is the place where you will start building your assets base which is the engine for your Financial Freedom.
In South Africa an excellent, easy to use and more importantly cheap platform is Easy Equities.
5. Store Accounts
Store accounts you ask yourself? Why are there 5 accounts now?
Exactly, they have no place in your wealth building journey. Pay them off and get rid of them!
