A financial plan provides financial security, in particular in the event of the unforeseen events like disability or death and addresses the big concern of having enough money to retire independently, said Marius Bester, an advisory partner at Citadel Investment Services.
“When creating a financial plan, you start off by identifying goals,” he said. “However, each goal needs to be achievable in the context of the individual’s situation. This phase of the financial plan serves as a type of reality check, which takes into consideration the individual’s resources available to achieve their desired financial goals.”
Bester offered these 10 tips to follow when preparing a financial plan:
1. A detailed personal budget is a good place to start. Have a look at your budget and see how any additional expense for life cover/disability cover/retirement planning will affect the monthly budget.
2. Determine your financial goals and be realistic. Ask yourself: is it life cover and disability or retirement and investment planning or all of them that must be addressed?
3. Compile a list of your assets and liabilities, including a list of your current portfolio, such as investments and policies.
4. Include details of the income of both spouses. This can also include dreams or aspirations, such as owning a holiday home or buying a vintage car.
5. Consider tax implications. The advice of a financial planner cannot be stressed enough when it comes to the complex world of tax.
6. Be aware of the effects of inflation on values, in particular, your retirement planning.
7. Find out who you can contact to prepare a detailed analysis and establish what the costs will be up front.
8. Get your partner or spouse involved with the process as well.
9. When it comes to retirement planning, your retirement fund at work will not be enough. Seek financial advice to secure a comfortable retirement.
10. Preferably work with a certified financial planner. It is a good idea to conduct a background check by asking for references before working with them.