Finally she asked:  out of everything you tell me to do, where do I start?  Now that is an important question.  I am convinced that a lot of the financial trouble that people experience is because they do last things first!

Since we have arranged for medical aid, short-term insurance and PPS, we have covered the risks that can be financially crippling.  That should always be step 1.

ABSA gave her all the access to credit possible, so I am concerned that she will go on a shopping spree with a credit card.  So the second step is to stay away from credit cards and overdrafts.  I am glad, very glad, to report that she said:  I am your daughter, don’t worry!  Hey, made me proud!

Nobody else would tell you this, because it is “old wisdom” and not in favour since we have credit cards and the like, but every month put away some money in a 32-day notice deposit account.  Try to build up to about 3 to six months of salary.  This is an EMERGENCY fund.  All those unexpected expenses, such as cars breaking down, microwaves blowing up.  EMERGENCIES.  Since it is a 32-notice deposit, you obviously cannot use it when you crave a pizza and it becomes an emergency.  Without a fund like this, the banks will own you, since you will have to use debt to fund emergency expenses.  And debt is a very steep hill to climb.  And very slippery.  Millions of people can testify to that right now.

Step 4 is to invest for cashflow.  We cannot be financially free without a passive cashflow.  Furthermore, the sooner you have that cashflow, the sooner you will be free.  And unless you have the extra cashflow, your whole life will be like the thing that now bothers you:  I won’t have money to live.  The best cashflow, financial freedom investment, is property.  So get going as quickly as possible.  But remember, we are taking it in steps here.

Once your property portfolio is giving you a cashflow that is sufficient, you start investing for capital growth.  That is step 5.  And for that, refer back to “how does shares work”.

The point is this.  Once your passive income is secure, you have more than enough money to live.  You can have nice holidays, cars, if that is what you like, speculative investments, whatever. 

If you change it around, if you start with nice holidays and speculative investments or building capital, you will be a slave all your life.  Just look around you!