8 things that should be in your financial plan


If you’re keeping an eye on Absa/City Press Money Makeover 2017 you may feel inspired by the way in which the candidates have transformed their financial situations, created nest eggs and paved a way for financial freedom. 

But there’s no reason why you can’t emulate their success by doing your own makeover and putting together a financial plan to suit your needs, goals and income. You can compile your financial plan yourself or you can do it together with an accredited financial advisor. Either way, this is what it should contain: 

1. A debt repayment plan: From home loans to credit and store cards – it’s easy to rack up debt, but it’s not so easy to pay it off and be consistent with it. Pay of high interest debt like your credit card first. Thereafter if you want to continue using it set up a debt order so you pay it in full every month.

2. An emergency fund: You never know when you may need money in an emergency so it’s always good to have an account where you accumulate at least two months’ worth of income. Consider fixed deposits as they offer better interest rates than standard savings accounts. 

3. Savings goals: A financial plan is meant to map out what your goals are and how you are meant to achieve them. Consider formulating a strategy for things like things like school fees, sending your children to university and your holiday trips. 

4. Your retirement plan: To often retirement plans get delayed in favour of ‘here and now obligations’. Don’t neglect your pension savings. Consider a retirement annuity or pension fund, as these products offer excellent tax benefits. 

5. Calculations of the fees you are paying: Investing can be an expensive exercise if you don’t choose carefully. Fees can eat into your savings if the people advising you and investing on your behalf take too much of the pie. Good advice is worth paying for but your advisor must ensure that you meet your saving goals and take all fees into account.

6. Insurance: Studies show that when it comes to disability and life cover, South Africans are often underinsured. South Africans can also be underinsured when it comes to other types of cover too such as building and contents insurance. Don’t let a major life event leave you feeling shortchanged and unable to support your family. Speak to a financial advisor to ensure you are adequately covered in the event that something should happen. 

7. Consideration for all investment options: Unit trusts are typically considered in an investment plan. But take care to consider low cost investment options too like the Satrix range of investments. 

8. Estate planning: A will provides clear instructions and direction about how your assets, which may have taken a lifetime to accumulate, will be divided. It’s in your family’s best interest to ensure you leave behind a valid will to ensure that your wishes are met. Consider creating a will and updating it, particularly after events such as the birth of a child or a divorce. 

A financial plan or makeover won’t necessarily take a few hours to set up. Depending on your needs, getting all the above points in order could take days to plan. But it will be worthwhile to conduct this exercise as it will leave you, if conducted properly, with a sound retirement and give peace of mind to you and your dependents. 

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For 14 free days, you can have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today. Thereafter you will be billed R75 per month. You can cancel anytime and if you cancel within 14 days you won't be billed. 
Subscribe to News24


Read the digital editions of City Press here.
Read now
Voting Booth
Two years after André de Ruyter joined Eskom, South Africa is experiencing its worst bout of load shedding. Is he to blame?
Please select an option Oops! Something went wrong, please try again later.
No, he got in late
83% - 45 votes
7% - 4 votes
Fire the whole lot
9% - 5 votes