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Top three tips to build wealth at an early age

01 August 2016 Jamey Lipschitz, Sanlam Private Wealth
Jamey Lipschitz, Head: Wealth Management , Sanlam Private Wealth.

Jamey Lipschitz, Head: Wealth Management , Sanlam Private Wealth.

According to research by Bayport Financial Services, young South Africans only save between 1% and 8% of their income. With so many South Africans struggling to put money away, it is heartening to find ‘heroes’ who are working hard to refute this trend. We can learn a lot from young South Africans who are ambitious, financially-savvy and motivated. At Sanlam Private Wealth, we have been watching one such young South African with true interest.

Sandile Shezi is a young Durban-born entrepreneur, the youngest self-made millionaire in South Africa. His company, Global Forex Institute, makes an annual profit of R30 million. Not only is he knocking the business world ‘out of the ballpark’ but he also has a very solid grip on his own personal finances and wealth management.

We asked Shezi for this three top tips for saving and growing wealth.

1. Invest first, spend second

Shezi identifies the ‘live for today’ culture of instant gratification as one of the biggest hurdles for young South Africans. “Young spenders have distorted the formula for creating wealth. They very often spend first and then (possibly) invest later, from what they have left over. But I really believe the way to go is to first invest and spend thereafter. My definition of success goes beyond sports cars and instant gratification. It is about empowering yourself and saving for your future first, spending second.”

In our view, for more people to have Sandile Shezi’s exemplary approach to spending and investing, we need a fresh perspective to shift young people’s focus to saving. First we should be helping young people focus on their short and long-term goals and identifying practical steps to get there. For example, if their goal is to buy a new car, outcomes-based guidance could include saying ‘this is the total cost required for the new investment’ and stressing the importance of taking this step ‘without incurring debt.

2. Adopt a wealth-creation mindset

Shezi credits having the right mindset towards wealth creation as the key to his success. “My view is: nothing is impossible! South Africans have to start focusing on creating long-term generational wealth rather than just making good money in the short term so they can be perceived as ‘rich’. Early on I made the decision to be creative in solving problems and finding solutions to the obstacles that stood in the way of my success.”

Interestingly, when young people are given the right tools, they show much greater financial discipline and the capability to manage their spending well. This is according to the 2015 Millennial Retirement Saving and Spending study by global investment firm, T Rowe Price. So we understand that young people are tired of being told to save – this message isn’t making the necessary impact.

We should be looking for fresh, compelling ways to help young people. Like, for instance, finding people within that age group who can be true inspirations, like Sandile Shezi.

3. Find a mentor

Shezi admits that building his empire was not a journey without hurdles. “In my experience, the best way to make informed decisions and avoid financial mistakes is to find a mentor. I largely accredit my success to seeking advice from those that I admire and could learn from – they have achieved what I wish to achieve and are therefore able to provide a strong support structure.”

Quite often, saving when the cost of living is so high can seem impossible, and that’s where trained professionals could assist. Finding a financial mentor or advisor, who can act as a sounding board and guide all aspects of money management can be invaluable.

No one is saying saving and building long-term wealth is easy in the current climate. But as Shezi has shown, with the proper will and goals, it is possible to become a huge success and to manage your financial journey extremely well.

 

 

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