Financial Planning
What is financial planning?
Financial planning is looking at the future and bringing it
back into the present while you can still do something about
it. ( Roy Diliberto)
Why have financial plans?
There are many ways that your finances could be influenced,
and having a financial plan can prevent it. As a bread winner
or individual you have responsibilities towards your self
and your loved ones. By adding another person to your life
you are responsible for the welfare of another person, and
your responsibility’s can last for at least twenty years
if not for life.
An unplanned event can put heavy strain on you savings and
retirement plans, how will family finances cope if either
of you and your partner had to stop working?
It is central to the way we live our lives, whether it is
to buy something now or to invest in the future, despite its
importance we take money for granted until we no longer have
it.
If it is to grow, money must be carefully tended and nurtured.
You can make your yearly calendar turn your expenses into
savings.
Here are a few tips:
JANUARY:
Get rid of Debt:
Getting out of debt should be your most important resolution.
FEBRUARY:
Reduce you taxes:
This is the last month of the tax year; you can make adjustments
to both what you can deduct from your taxable income and what
you need to pay if you are a provisional tax payer. Have you
started to plan for retirement or are you still dreaming about
it? You can deduct 15% of your non-pension able income form
your taxes by investing into a retirement annuity.
MARCH:
Go thru a financial check up:
Make an appointment with your financial advisor and let him
or her help you with a financial needs analysis:
The FNA will help you identify:
- Your lifestyle goals: Live for yourself and only buy what
is necessary and not luxury for your friends and neighbors
eyes!!!
- Financial goals: Retirement planning, saving for future
goals.
- The needs of your dependents, will all your debts be
covered if you were to die, become disabled or terminally
ill?
- The affordability of your lifestyle
- Life cover and income protection: if you cant or don’t
want to buy income insurance then you cant afford to have
an disability
- Savings goals: Long term and Short term
- Income goals: Extra income, passive income, better cash
flow
APRIL:
Protect your possessions:
Be careful of being underinsured or over insured.Make sure
that you are getting the best comprehensive insurance for
what you can afford, loosing a valuable asset can cost you
money of huge excess fee’s and having cover for assets
you don’t even own. Read and understand your assurance
policy. Make sure that all your valuables are included in
your Assurance portfolio, or update it by adding new valuables.
MAY:
Plan your estate:
Do you have a will? A will sets down how your assets will
be divided according to your whishes.
Not having a will can have a devastating impact on your dependents,
you will die intestate and that means that you will have your
dependents waiting and struggle on cash flow plus some of
your assets might even go to some relatives you didn’t
have a relationship with. Your dependents will need to make
funeral arrangements, pay debts, taxes and keep the family
going.
JUNE:
Review your banking costs:
Home loans, Interest rates, Transaction accounts, credit cards;
Banking is getting a lot more competitive and you need to
make sure you have the best deal on your Home and asset finances
as well on everyday transactions.
By getting a better deal elsewhere you can save thousands
of rands over the years which could have added to your retirement
savings.
The problem is that is a hassle and we as people want everything
done for us, remember you are looking after yourself. The
longer you wait and just except the poorer you can become.
When you are young you might not have the best credit rating
but as you grow older and become more financially fit you
can negotiate on a better interest rates.
JULY:
Submit tax returns:
Late submission or failing to submitting your returns will
result in severe penalties and interest payments.
Go visit the www.SARS.co.org for more information or consult
your nearest Tax consultant or advisor.
SEPTEMBER:
Choose your beneficiaries and choose them right:
Retirement fund beneficiaries are never subject to your will.
If you die before retirement your retirement fund trustees
are obligated by law to take all your dependents into account
when they distribute your benefits. They cannot exclude people
who are financially dependent on you.
If you do not have any people dependent on you it is even
more important to name people who you want as beneficiaries,
it could take up to 12 months even years to settle the a claim.
Life insurance policies will payout to your beneficiaries
and will not be delayed.
OCTOBER:
Planning for the big break:
Most of us get paid middle December and our salaries must
last until the end of January.
Be sure to budget according to you lifestyle expenses. Some
people get to the first of January and have to cancel their
life insurance premiums so that can have all their so called
“ more important payments” go down, when just
as we return form our holiday we get into an accident that
can cause us to be disabled for life or even die.
GETTING A BONUS CHECK?
How about a reality check on all your credit card debt from
buying all those Christmas presents and overspending on your
holiday. Keep your bonus to settle any debts and even to partially
help you make it thru the month of January.
NOVEMBER
Healthcare benefits:
Everybody knows that medical aid is expensive and takes a
big bite out of our salaries.
In November most Medical aid schemes starts to notify their
clients on the changes they intend to make the following year.
This means that you now can consider how much you will pay
and for what benefits you will pay. Remember that being under
insured can cause heavy financial damage and being over insured
can harm your cash flow. Be clear about what your needs are,
look back at what you biggest expenditure was regarding medical
expenses.
DECEMBER:
Your own financial report:
It is now a good time to summarize and account how well you
have done in the past 12 months.
What you own must outweigh what you owe.
Ask yourself these questions:
Has my cash flow improved?
Have I managed to pay all my account on date?
Is my family protected against the loss of income to be sought
after for at least 20 years?
Have I closed my accounts and stopped buying unnecessary luxuries?
Have my dream for retirement become more of a reality?
Has my bank balance been moving upwards and have I disciplined
my family to help me do so?
If not your in deep trouble and in effect bankrupt!!
Only you can rearrange, and restructure you future plans!!
RESPECT your life style:
- Live within your means
- Use credit responsibly and carefully
- Don’t put of savings because time will catch up
with you
- Plan for life’s unexpected surprises; premature
death, disability, illness.
- Don’t take on more risk than you can afford.
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