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The Mayan calendar may have ended but for those hoping to skip financial planning for 2013 and eternity the news is not good! Yes, we are all still here and perhaps more than ever in need of a fresh look at how we plan our financial future. Start 2013 with a new approach and a solid plan for your finances. The seven steps below are a great start! Another New Year, another resolution! What should it be this time? With financial planning in mind and as is customary at the start of the year, here are the ‘Magnificent 7’ resolutions to help you plan your financial life!
1. Make a plan. Not just any plan, take it one step further and make a financial life plan. A financial life plan will require a review of where you are and where you want to be. You will need to set a series of targets over the phases of your life. This can be complex or very simple and should be a base to work with as you progress through your life and career. Most of us neglect the management of our money. We get it, we spend it, we save it and we invest it. What we don’t do is plan. We don’t sit down, decide realistically where we want (or need) to be financially and then work out how to get there. Another year passes by and the here we are amongst the ninety percent of people who haven’t been able to meet our resolutions. Sit down and work out where you are financially. How much do you spend? How much are your assets worth? How much do you save each month? Then review it; which of those bits do you want to change and which can you change?
2. Set goals. Look at the big picture and set clear and realistic targets. Short-term goals might include specific monthly debt-slashing or saving a certain amount extra every month. Don’t cheat. Review your bank statements so you really know how much you spend and what you spend it on. An easy win could be to reconsider how you spend on your credit cards. Longer-term goals might involve regularly overpaying your bond so you own your house by a certain date; or setting up and contributing to a retirement plan with a view to hitting an ambitious retirement income.
3. Be Specific. “Save more” is generally one of the top resolutions made. This will fall apart if you don’t add a proper target to your resolution. “Save R1000 a month until I have three months’ worth of income in my cash account” is better.
4. Review your plan. Look at where you are – with your partner – every six months; check your progress against your targets; and make new ones if you are ready to do so. Begin with the end in mind and you might get the end you want.
5. Get yourself protected. So often overlooked, protecting you, your family and your assets against unforeseen circumstances is essential, especially if you have a family dependent on you. Make sure you and your nearest and dearest are protected against illness, accident, death or mishap. The easiest and most common way to do this is through an insurance policy.
6. Think about estate planning. For a start, make a Will; a morbid topic, which is why many people put this off. However, it is best to be prepared and there is comfort in knowing that your family will not suffer the consequences of an intestate estate. Also ensure that your beneficiaries are up to date on your life policies and consider whether a trust would suit your estate planning.
7. Speak to me. As a professional planner I will work with you to develop a series of strategies helping you to achieve your short, medium and long term goals. Together we will look objectively at your finances and risk profile, planning with you instead of for you thus enabling you to manage your financial life and meet those New Year’s resolutions. |
