THE POWER OF A FINANCIAL SELFIE

Everybody’s taking selfies nowadays—now it’s time to take one of your financial plans

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Do you remember your new year’s resolutions? The usual ones are to lose weight, join the gym, stop smoking and to manage your money better. In most cases the one you forget first is related to money (and the gym).

So, let us take a ‘financial selfie’ to see where you are now and how you can improve for the rest of 2014 and beyond.

Look at your plan

Why is it so difficult to start saving and stick to it? Often we don’t think about the future and saving towards a particular goal. Having convenient access to credit usually makes it easier to get what we want when we want it.

You can pay for short-term goals like car services or washing machine repairs using a separate bank savings account, notice deposit or moneymarket investment. Here you want to try and save three to six months’ worth of expenses into the account so that you can tap into these funds instead of using your credit card when there’s an emergency. It also means you don’t have to apply for another bank loan to cope with emergency expenses.

You can use a unit trust to save for medium-term goals, like a deposit on a new car, paying for a wedding or for your children’s school fees. A unit trust is ideally a three to five year investment

that is flexible but offers a higher rate of return because of the higher risk that you’re willing to take.

Look at retirement

It’s hard enough to save for a goal or a particular item, never mind something as foreign and far away as your retirement. But saving a set percentage of your salary from an early age will help you get the type of retirement you want—one where you don’t have to depend on anyone else to support you.

Saving about 12–15% of your income from the time you start your first job and keeping up that percentage until you retire will help make sure that you have at least 40 years of savings under your belt, if you retire at age 65.

Preserving your retirement savings as you move from job to job will also help keep your savings for their intended use—your retirement.

If you don’t have a pension or provident fund through your employer, you need to consider a retirement annuity fund as an option.

You’ve taken a look, now take action

Your starting point is what goal you’re saving towards. You could have more than one of course, but they need to number them according to how important they are to you. Then make a list of your income and expenses and where you can make the changes. Follow through with these changes once you know what needs to get done. Take your financial selfie and see what it shows you. You can improve the way you look in most ‘selfies‘, just like you can in your financial selfie. So what does your picture look like?

Alexander Forbes is an authorised financial services provider FAIS licence number 31753 company registration number 1995/012674/07

Shiree Coetzer, Alexander Forbes Financial Planning Consultants

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