Here’s a realistic savings plan

2019-09-30 15:18
(PHOTO: GETTY IMAGES/GALLO IMAGES).

(PHOTO: GETTY IMAGES/GALLO IMAGES).

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The start of the new year comes with a lot of introspection about your life, decisions you might have made and plans for your financial situation.

Instead of worrying about how you overspent money during the holiday season, you can use this opportunity to start over by making long-term financial decisions that will be rewarding to you and your family.

COMMIT TO GETTING BACK ON TRACK

Momentum Consult Practice Development Manager, Kalay Pillay, says it is not too late to get back on track. However, this is a process that will require commitment. The reality is that some people are in so much debt that they have given up on ever getting back on track.

But financial experts say ignoring your financial problems doesn’t make them go away. “People should want to be debt-free and changing your mindset is a good place to begin. We often self-sabotage by ignoring debt. This only escalates the problem and only makes it harder to overcome,” says Kalay.

SPENDING MONEY ON WHAT’S IMPORTANT

It is often easy to think about what you need now without really thinking about the important things that you might need in future. As you commit to being more financially savvy from now on, Liberty Financial Planner, Boitumelo Mothoage, shares what you should consider prioritising when you think of spending your money.

- School fees or a deposit on a house or car: For shorter-term investments, where the time frame is between six and 12 months, you should consider money market funds or a fixed deposit, which can guarantee your capital and a reasonable interest.

- Investing in your child’s university education: You should start investing in your child’s tertiary education as soon as possible so that the growth on the investment can assist in combating the above inflation increases in education costs. You should consider investment products that grow at a rate above inflation.

- Saving for life goals: Many people have goals that they wish to achieve over the next 10 years such as starting their own business or taking extended leave from work. It is wise to invest in a product that will grow ahead of inflation.

- Preparing for the golden years: It is important to save money so that you can retire comfortably. A retirement annuity plan allows you to supplement your pension fund offered by your employer, especially if you cashed in your retirement fund when changing jobs and are now playing catch up.

- Investing in yourself: Investing in yourself through further education or starting your own business is equally important. It is important that your financial adviser looks at your plan holistically and finds a balance in meeting all your investment needs.

WHERE TO START

“Having a budget and a financial plan are important tools to ensure you remain disciplined. Making a few sacrifices in the new year is important and cutting back on luxuries is essential,” Kalay says.

Both Kalay and Boitumelo believe that getting a financial adviser may help improve your finances. Kalay says, “Financial advisers are experts in this field and will ensure a budget is drawn up and a financial plan is put in place. They will hold you accountable and help you achieve your goals.”

Read more on:    personal finance  |  money
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