#Finance101: A crash course into money matters

Here are four personal finance basics you will need to build a strong foundation:

1. Earn, earn, earn
   We all say we want a higher income, but we often neglect our ability to generate that amount. It starts with building a high-value skill set and gaining credentials that employers would pay for.
   
   Lawyers and doctors are classic examples of professionals who command a very high wage, but these days, there are many emerging industries with good earning potential.
   
   
2. Don’t forget to save!
   Chasing that earning ability also comes with the risk of “lifestyle inflation” or “lifestyle creep”. This is when you feel that your much-deserved increase in income should be accompanied by a proportionate increase in spending.
   
   Things that you once considered “luxuries” suddenly become “necessities”, while what used to be an upgrade in areas such as travel, accommodation and dining become the norm. A good framework is to simply set aside 20-50% of your income to save and invest. This will help you control your spending as well as ensure that you have padded your nest egg just enough to maintain the increasing cost of your lifestyle even through retirement.
   
   
3. Invest early and diversify
   Earning a good income is important, but here’s the thing. You can’t work forever, and we suspect you wouldn’t want to either!
   
   This is where you’d want to build up a strong and diversified portfolio of assets. A balanced portfolio will consist of both high-risk-high-reward investments as well as “safer” low-risk-low-reward asset types. Look into stocks, bonds, real estate, and more for both short-term and long-term gains, regardless of your personal risk appetite.
   
   One more thing: Investing early is key. Time is money and the earlier you begin your investment journey the more you can earn from compounding interest, especially if you re-invest your returns.
   
   
4. Build your safety net
   You earned, you saved, and you invested. What could go wrong? Plenty. That’s why insurance exists.
   
   When it comes to personal finance, the most important aspect is arguably your insurance coverage. Making sure you’re protected from the most dire of situations is always worth considering, regardless of how unlikely you’d think it’ll happen to you.
   
   Getting coverage for death and total permanent disability is the bare minimum of course, but do also consider critical illness coverage as well as hospitalisation and personal accident coverage.
   
   This will allow us to have more options when it comes to getting the medical treatment we want, as well as reducing our cash outlay when paying hospital bills.