Build Wealth From Day One: A financial Roadmap for Young Professionals
Compelling evidence – both global and local – indicates that life is significantly more expensive for Millennials (Gen Y) than it was for Gen X or Baby Boomers. International research shared by the Journal of Consumer Research shows that Gen Ys are finding it much harder to finance homes and other large expenses than Baby Boomers did in the 1970s. Local research by Ipsos in turn indicates that due to historical inequalities, many South African Millennials do not have the advantage of inherited wealth, making it harder to build financial security.
In the first episode of Citadel's new podcast titled The Wealth Journey, Citadel Advisory Partners Kirsten Smit and Elelwani Ravele share a financial roadmap that offers guidance to working professionals today.
The Road to Wealth Starts with Your First Salary
'Your first salary sets the tone for your future financial habits,' says Ravele. 'From the outset, working professionals can calculate their fixed costs for items like groceries, entertainment and transport, to avoid the trap of lifestyle inflation.' Smit agrees: 'The goal is to enjoy your life but still create a deliberate surplus that can go into discretionary and retirement savings.'
Ravele notes that working professionals need to caution against the temptation of 'emotional or impulsive financial decisions,' especially where it pertains to big-ticket items. 'A car is not an investment; it is a lifestyle choice. Vacations are great, but it is important not to pay for it out of debt or emergency savings.'
Smit highlights that savings can be transformative on the wealth journey. 'An emergency fund, totalling three full months of salary, is one of the smartest moves you can make,' she says. 'It gives you financial resilience – whether it's for unexpected unemployment, a medical emergency, a burst geyser, or helping a family member.'
Weigh Up Significant Spending Decisions While Considering the Economic Climate
Ravele and Smit advise their clients to have transparent conversations with their partners and advisors when planning or undergoing any major life changes.
'Big life moments require big financial planning,' says Ravele. 'Whether it is your first car, a baby, or helping parents or siblings financially, you need a plan. Stress test your budgets in advance to see if it is truly affordable.'
On the topic of property investment, Ravele cautions that 'Buying property can be smart, but it is not always the right move. Homeownership comes with levies, maintenance, rates, and taxes that potential buyers need to thoroughly consider. Renting in turn offers flexibility, particularly if there is still an open decision on whether to move or travel.'
Regarding marriage, Smit says: 'Money values are shaped by your upbringing. When two people come together, they bring different habits and expectations. Talk about spending styles, income, debt, saving goals, and even prenuptial agreements. It is not unromantic; it is thoughtful. Financial transparency is the cornerstone of a healthy partnership.'
Smit, a mother of four, advises: 'When it comes to children, factor in everything from school fees and sports tours to global investments if you wish to raise global citizens.'
'Ensure long-term savings for your children, including unit trusts and tax-free savings accounts for their education. It is also vital to invest in risk cover as parents, including life and disability insurance,' says Smit.
The Value of Long-Term Financial Advice
'We're in a generation that loves Do it Yourself (DIY) solutions and digital apps,' says Smit. 'But talking to a professional advisor is different. Advisors are human, experienced, empathetic, and your co-pilot to help you map out your goals and avoid costly mistakes.'
'Start investing early, even with small amounts, to leverage the power of compounding – and maximise impact by seeking sound advice,' notes Smit, who recommends thinking about future goals, such as lifestyle expectations at retirement and where you will retire.
Conclusion
Considering that the cost of living is higher for young professionals today than for previous generations, the reality is that personal finance is no longer a skill younger South African professionals can afford to learn later in life.
Ravele concludes: 'It is common for people to think, 'I'm young and healthy, I don't need to plan.' But your income is finite, and getting into the habit of saving – even small amounts – can drastically improve your wealth trajectory.' DM
About Citadel Investment Services
Citadel is a specialist wealth management company with 32 years' experience in providing holistic wealth management solutions. Citadel's expert advisors forge and maintain authentic relationships with clients based on trust; enabling them to understand each individual's unique goals and develop the best financial roadmap tailored to them. Citadel enables its clients to explore the true potential of their hard-earned wealth by presenting them with tangible advice and solutions. It's a client-centric and advice-led business, with an award-winning in-house asset management team. Citadel offers a variety of services including investment advice, asset management, philanthropy, local and offshore fiduciary services, forex strategy, and family office solutions. For more information about Citadel and its services visit www.citadel.co.za or follow @Citadel SA.
Disclaimer
Citadel Investment Services Proprietary Limited is licensed as a financial services provider in terms of the Financial Advisory and Intermediary Services Act, 2002. Kindly note that this article does not constitute financial advice. All information and opinions provided are of a general nature and are not intended to address the circumstances of any individual.
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