Where there is a will ...

2011-01-02 14:48

Here is something to ponder just as that sweet taste of New Year dessert begins to fade from your mouth.

With better financial planning you can improve future festive season experiences for your loved ones – even if you are no longer there.

The three key ingredients for a healthier financial diet include having a valid will, an investment account and appropriate debt.

Financial experts advise consumers to incorporate these financial habits in order to enjoy a ­successful 2011.

Vanya Terblanche, the national manager for employee benefits, trust funds and will services at Absa Trust, says a will should reflect an individual’s wishes. She adds that the individual’s current circumstances should also be considered when writing a will.

The absence of a will could lead to countless court battles and the distribution of the estate could then end up being different from the ­individual’s wishes, she says.

A professionally drafted will should make provision for the nomination of a competent executor, the protection of assets, the nomination of a competent trustee or trustees and the nomination of a guardian for minor children.

“Without a will, one’s estate is distributed in terms of a set formula known as intestate succession,” says Terblanche.

“The beneficiaries may also not be the ones you intended to inherit from your estate.”

A will should be updated when circumstances change.

These changed circumstances could ­include divorce, the birth of a child or a change in financial status, she says.
The will should be stored in a safe place.

“It is also a good practice to let a trusted family member have some details in case of unforeseen incidents,” says Terblanche.

Carmen Whateley, the head of funding at Nedbank, says consumers should consider putting aside a little cash each month for the future.

This should happen as they pay off their most expensive debt first, or debt that accumulates high ­interest. Examples are credit card, personal loan and clothing accounts, says Whateley.

She says investing money is very important, but the investment requirements of an individual should take into account their unique personal situation.

“Put a portion of money away each month with relative immediate access,” she says.

“Remember that the interest rate gained depends on the balance available.

“It is always better to put a lump sum of money away at one go.

“You should not draw from the money for a long period, for it to appreciate in value,” she says.

Whateley says there are penalty fees levied should withdrawals be made before the agreed period.

She further warns against ­investment options that carry great risks.

“Ask yourself if you can afford to risk potentially losing your hard-earned money,” she says.

Having debt is not necessarily a bad thing if it is properly managed, says Chris van Rensburg, chief executive officer of Kudough, an organisation that tries to help consumers implement better money management skills.

Van Rensburg says his organisation observed a quieter and more sober trend in consumer spending last year.

Consumers seem to be taking their financial problems more seriously, he says.

This is based on a survey ­Kudough conducted before the start of the festive season.

“The results show that consumers are confronting their debt and that they are doing their best to­ ­understand and manage it.

“There seems to be a growing desire to minimise debt.

“Consumers are seeking ways to either reduce their debt burden or maintain their good status,” Van Rensburg says.

Most of the participants in the Kudough survey planned to reduce their debt with the bonuses they expected to get from their employers.

“The findings are reflective of the personal debt crisis that many consumers find themselves in,” he says.

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