22 July 2022
And as someone very committed to helping as many people succeed financially as possible, he is happy to share his learnings honestly so that others can learn from his smart, and not-so-smart money moves.
Tyson sat down with Nicolette Mashile (aka the Financial Fitness Bunny and his Moola-Money co-host) and Sanlam financial adviser, Adele Barnard, to talk about how South Africans can confidently kick their career off. Here are key take-outs from their chat.
Getting your first job can be incredibly exciting. It is the moment you take your first steps towards financial independence. But did you know that you can negotiate your first salary? Like most of us, Tyson didn’t.
Tyson says, “I didn't negotiate my first ever salary. I was 19. Looking back, I had neither the confidence nor the information to know that negotiation is standard practice in the workplace.”
But the nature of today’s job market can make the idea of negotiating seem difficult but doing so often yields good results.
Nicolette says, “I think many people are afraid of negotiating their salary, especially at that age because you don’t know that you have the option. I think you are also often so excited about your first job that you don't interrogate your salary too much. However, it is a good idea. Do the maths about how much your expenses amount to and see how your salary fits in with that. Also, remember to research the average salary for your role and experience.”
“It is crucial to read over the details of your employment contract thoroughly. Understand clearly what is expected of you and what is expected from the other party. Find out if you have company benefits, leave days, the notice period for resignation, etc. Agreements are binding, so it is important that you understand what you are agreeing to. Never assume and if you are unsure, ask,” says Adele.
As the backbone of any financial wellness journey, the earlier you learn to budget and save, the better. Part of that lesson includes budgeting based on your “take-home” or net salary (salary after taxation, PAYE deductions, etc.) rather than your gross income. Many individuals get confused between their gross and net pay and there is a big difference between the two. Be sure to ask your employer for a ‘dummy’ payslip so that you can see what your net salary is.
Once you know how much money you are earning, set up a budget and save however much you can. Fortunately, this was a lesson Tyson mastered from a young age.
He says, “I made a point of saving money early. Initially, it was towards a deposit for a car, but I quickly pivoted to focus on saving for university tuition. I was more invested in reaping the long-term benefits of a wider skill set and asked myself ‘do you want to drive to work or walk to school?’ I committed to the latter and am so grateful for that.”
Adele says, “In South Africa, we are not taught how to budget properly and that is where things go south very quickly for us. The ideal way to set up your budget is to divide your take-home income into three categories: 50% for needs, 30% for wants and 20% for savings and debt repayments.
“It’s also important to invest in a retirement annuity early on. The ideal time to start contributing is as soon as you are permanently employed – or sooner, if possible – to capitalise on the magic of compound interest,” she says.
Many South Africans have a difficult relationship with debt and Tyson was no different.
Tyson says, “I was so debt-averse that I didn't acknowledge there are good and bad forms of debt. I wanted everything to be ‘if I can’t pay for it in cash, I won’t get it’ which works to a certain extent, but isn’t always the best case with much larger purchases. That approach always left me with a bit of a liquidity issue after making the purchase.”
Balance is the key. Debt traps can create major issues in your life but extreme debt aversion can also hamper your efforts to reach your goals.
Adele says, “There is good and bad debt. Using debt to finance something like your studies or a house is a good thing – as is building up a good credit score. But using debt frivolously can land you in a lot of trouble. Establish long-term goals and consider how debt can help you reach them.”
“One of the most important things you can do is set financial goals. Goal setting and planning is an important step to becoming financially confident and the good news is that you don’t need to wait on your first job to get started but it will impact the way you view your first salary. By deciding on your goals and setting them out in front of you, you’ll be in a better position to put your plans into action when your first pay cheque comes in. Your goals can be both long-term, like saving for retirement, or short-term, like building an emergency fund, and they will form the basis of your financial planning,” says Adele.
According to Nicolette and Adele, building an emergency fund will help insulate you when life takes its inevitable twists and turns. Nicolette says, “The more we know, the better we do, and the better we do, the more financially confident we can be. So, if you feel you don’t know enough, don’t be afraid to ask someone close to you who knows better or consult a financial adviser. If you can get your finances right from an early age, achieving your goals will be so much easier.”
To learn more about how to manage your finances – while being entertained – tune into Sanlam’s Moola-Money Family Game Show on Sundays at 19:30 on SABC 2.