In this contemporary world where life is aimed at how much you earn and how you invest, there is need to understand the “how” of money making. Young adults all over the world needs to learn how to make money from savings as a teenager up to old age. Then, they will realize how much they must haves saved all through the span of their life.
-: Income (What You Earn Every Month)
The #1 most valuable asset you have is your income, your ability on how to make money month in and month out. Everything you do should be focused on increasing that amount, maintaining that amount, and preserving and protecting a 50-year stream of it from age 20–70. Everything you do — from choice of careers, choice of college, to choice of what city to live in — will all determine what your income is.
-: Debt (What You Owe others)
The #2 most valuable tip on how to make money is to live debt free from day one. Never get into the debt trap. If you have a N100, 000 balance on a credit card that is a 29.9% APR (a credit card’s interest rate is the price you pay for borrowing money. For credit cards, the interest rates are typically stated as a yearly rate. This is called the annual percentage rate (APR). On most cards, you can avoid paying interest on purchases if you pay your balance in full each month by the due date) interest rate, that creates a N36, 000 per year impact on your life. N3000 per month may not seem like a lot, but over 10 years, that N3000 in payments would have grown to well over N360, 000 if you had invested it well. If you were to maintain that amount of debt over all 50 years of earning, then you would have not only thrown away the $1,800,000 you would have paid, but you would have also missed out on the N21.6M that that N1,800,000 would have become if you had invested it. Paying off debt has the net effect of an immediate return that is equal to the credit card rate of interest. Where else can you get a guaranteed 30% return? Nowhere!
-: Monthly Expenses (How Much You Pay Out Each Month)
the next most important idea on how to make money is to live frugally (not wasteful) on a fraction of what you make in income. My recommendation is that your total expenses should not be more than 50% of what you make. However most people are not willing to make that sacrifice. In that case, the breakdown should be as follows given the ranges from low to high percentages necessary for success on the low end, or survival on the high end.
-: Housing (25%-50% of Income)
Typically the #1 most expensive choice we will ever make. Ironically it is also the least understood in proper terms. You work 8–10 hours a day, usually at an office. You sleep 6–8 hours and you get ready for work and ready for bed 1–2 hours per day. That means that 15–20 hours per day, you aren’t even using anything more than your bedroom and bathroom. That means that the other XXXX number of square feet of your house (space around your house) is a needless expense. My best deal ever was the apartment I had in Graduate School. It was a small two room apartment with a galley-style kitchen in between — it was amazing. N150 per year. Damn, was it a steal? Make up of what you need in an apartment. I would advise you go for apartments you know you need and not just acquiring much space you will probably not occupy at the end of the day.
-: Food (10%-20% of Income)
If you are single this number can be very different than if you have a family, but generally speaking you should never eat out or at least limit it to “date night” once per week, but even N4000 per week in eating out is over N150, 000 per year, and the 50 year impact to your savings and investing is N9.6M over 50 years. Don’t eat out.
-: Cars (0%-20% of Income)
Despite rumors to the contrary, you do not need the latest and greatest car to survive. I hate to spend much on cars since they are the #1 killer of income or limiting the chances of how to make money after eating out. Many car payments for maintenance are at least N2000 per month these days and over N25, 000 per year. That is a N1.4M impact over 50 years. Buy cars with low income expenditure. Take it from me — a friend pissed away over N2M over 27 years on cars, and that N2M now would be worth over N20M if he had learned this in his 20s. Don’t make the same mistakes he did.
-: Utilities and Phone (5%-10% of Income)
if you are renting, getting power, water and other utilities included in your rent is the way to go. You can get an average cost for some items like subscribing DSTV for N6000 instead of N12, 000 package and still enjoy the programs. Also, news flash: That latest iPhone for N500, 000 that you “can’t live without” is costing you more than you think. You can invest the money and gain profit of the same amount within the same year. That N35, 000 per month you earn from your investment is another N2.1M over 50 years.
-: Savings and Investing (0%-30% of Income)
Well if you have been keeping up with the ranges, if you were at the high side of spending for every category, congratulations — you have N0 and 0% left for savings and investing, and you are going to die broke and alone. That’s OK — in some society, you will have plenty of company, since 98–99 people out of 100 are in the same boat. Misery does indeed love company. If you keep the low side, you may be amazed that you now have 30% of your income left to save and invest. Congratulations — welcome to the top 1%-2% of people in the world! These are called “The smart Rich People.” Because you just laugh your ass off all the way to the bank. While others have enjoyed their income on living on the high and their N1000 bar tab, you are going to be enjoying your golden years not drinking garri and looking for kuli-kuli to join it with. If you get to this point you will have won. If you just did #2, #5, #6 and #7, you have saved a staggering N35.1M over 50 years. Enjoy. You now can do whatever the hell you want to do in retirement.
this article on how to make money for young adult remains a pondering facts that we must all look at and really work on. please help share this so as to teach the youth out there who may be ignorant of how to make money from savinga from their tender age towards adulthood.