Advice from the Donald

If you’ve ever watched The Apprentice on TV you’ll know who Donald Trump is – that really rich American dude with bad hair. Well, he might have bad hair, but he’s got really good money advice – he is worth billions of dollars after all. In his book, Think Like a Billionaire, Mr Trump says this about people with good ideas: “I’ve met some brilliant business people in my time, but some of them will never be billionaires because they never act on those brilliant ideas. So if you have a great idea, no matter how much work you know it will require, get going. Don’t just sit there. There’s nothing more criminal and self-destructive than having a great idea and then putting it off.” So what are you waiting for all you brilliant peeps? Who says you have to reach your 20s before you start making your millions?

Millionaire by 18?

Imagine being a millionaire by 18… Well, 16-year-old Fraser Doherty is on his way to becoming one. And get this – he’s nearly a millionaire thanks to jams. No, not jams as in tunes, jams as in the kind you eat on your saarmies! The British jammer got a £5 000 bank loan to work on his first range of three "no-added-sugar 'super fruit' spreads" which he says were recipes from his Gran. Fraser was so confident in his product that two huge supermarket chains decided to start stocking his jams and, as they say, the rest is history. The company made about £800 000 in 2008, so another good year and he’ll be a millionaire before he turns 18!

Get on the good side of interest

You’ve probably had loads of people telling you to save your money and put it in the bank, but you might still be confused as to why. Well, in the opposite way that banks make you pay interest for money you borrow from them, they give you money for the cash you place in their capable hands! This is the great side of interest and the one you should always try stick to. This means that you get to see your money grow – if, of course, you don’t go spending it. For example, if you invest R10 000, and the bank offers you an interest rate of 10% per year, you will get an extra 10% of your investment – in this case R1000 – absolutely free! How cool is that? Now you see where the saying, “The rich get richer” comes from – the more money you have in the bank, the more money you’ll make.

An interest in credit cards is not the same as interest!

You might think you know what’s important about a credit card – like, you really gotta get one as soon as you can – but research suggests that teens are not 100% clued up on plastic money. Investing firm Charles Schwab conducted a survey in 2007 that showed that only 45% of teens know how to use a credit card and just 26% understood credit card interest and fees. Here’s the basics… A credit card allows you to buy things even if you don’t have the cash at the time. What this means is that you have to pay off what you have bought in monthly installments. For example, if I buy a pair of sneakers for R1200, I might have to pay a monthly installment of R200 for the next six months. However, this is not all you pay as the bank will charge interest and a fee to manage your credit. Interest is a percentage that is added to what you already owe and is set by the bank. So, if the interest rate is set at 12%, you will have to pay an extra 12% of the money you have used on a monthly basis.

But do you really need it?

US banking firm Piper Jaffray announced this week that according to a survey they conducted, teens are going to be spending about 2% more on clothes in the coming year. Sounds great, right? Well, financial experts advise that you ask yourself the question: Do I really need that new hoodie/pair of baggies/mini-skirt, or do I just want it? Who cares, you might think, but it’s a good habit to get into to save yourself unnecessary disappointment and frustration. Here’s the thing… if you’re buying something just because you’re at the mall with your friends and want to buy something, the next time you really need something – like a new pair of jeans after your old ones got totally ripped at the skate park – you might not have the cash to buy anything. Think before you buy – it’s something to think about.