Don't buy that bakkie...and other lessons from financial professionals


Burning money has become quite easy in the digital age – recount just how many products/services were pushed to you either via traditional marketing channels (print, radio, TV or outdoor billboards) or personalised online ads. 

The latter makes being savvy with one’s finances truly difficult. 

Imagine having used a search engine to scout for that new pair of dashing, yet pricey shoes. 

You choose against it. 

But then find almost every website you visit, even ones completely unrelated to apparel, features the very shoes you searched for in the ads section – or show you many similar ones. 

Sound familiar?

“If I can give an older Jaco some advice it would be… Don’t buy the Toyota Hilux!” shares Jaco Prinsloo, financial planner at Alexander Forbes. 

Prinsloo paid off his VW Polo a few years back and four months later, after promising himself that he would not buy a bakkie – ended up doing just that. 

“While [the bakkie] is more comfortable and versatile, I am not happier than when I had a Polo,” Prinsloo asserts.Prinsloo’s spending conundrum is a familiar one that most of us are confronted with daily; conundrums that often deter and deviate from our path to financial health, which he describes as having control over your finances and not having finances control your life. 

“It’s the privilege not to worry about how to pay for unexpected expenses, counting the days to payday or the ability to help someone in need; being able to enjoy the experience or thing and not focus on how much it costs,” he explains.

With July dubbed national Savings Month by the South African Savings Institute (Sasi), finweek turned to some of SA’s leading financial professionals for some insight into how they manage their own money — from pitfalls to successes.Most financial professionals hold a consensus on what it means to be financially healthy. 

It ranges from living within one’s means and being able to easily service one’s monthly expenses within the monthly budget; saving a good 15% to 20% of gross income towards retirement; and diverting funds towards good debt instead of bad debt – for example credit card debt (where high interest rates are charged) – to formulating a plan based on one’s dreams and goals. 

The latter can’t always be immediately addressed, but it’s about knowing what you need to save towards these dreams and goals and then doing that in a systematic or prioritised way.

Identifying financial goals

“Every year during the festive season, I set my financial goals for the coming year and for the longer term,” says Janet Hugo, certified financial planner (CFP) and director at Sterling Private Clients. 

Hugo undertakes the planning exercise with family, which is not an easy process as conflicting goals are bound to arise. 

“We discuss goals as a family and then prioritise them.”Kenosi Magosha, head of client solutions savings at Sanlam, and Sonia du Plessis, CFP at Brenthurst Wealth, also sit with their spouses and/or families at the start of the year to plan for upcoming expenses. This includes checking if and how they can afford big expenses, such as holidays or home improvements. They also look at their debt to determine whether it is under control. For Magosha, debt (in her case, property) has to be paid within a set period of time. Magosha and Du Plessis also take stock of savings and retirement savings to check if they are on track with where they want to be. Children’s education also features in the discussions, such as assessing whether they are saving enough for university fees.Wealth expert, author and international speaker on money, Gerald Mwandiambira, says it “all starts with a dream”. 

“If you don’t dream, you cannot set a financial goal,” he says, explaining that you need to be able to visualise an outcome. 

“With any dream, you work backwards and can set any financial plans to make the dream possible.”

Keeping track of financial goals

With financial goals, you have to be realistic. 

“I know I will not be able to become financially independent in the next three years,” says Prinsloo. 

“Being realistic will help you to not be disappointed when things don’t go according to plan, which will happen.” 

With that in mind, he decides on a goal, determines just how many resources he can afford to allocate to achieving the goal and, by using simple math, calculates how long it will take.

“I approach my goals the same way you approach the task of eating an elephant: bit by bit.”

To make the big dream achievable, you have to make it bite-sized, says Mwandiambira, echoing Prinsloo’s division of goals into timeframes.

“As nerdy as it sounds,” Magosha says, she usually builds spreadsheets (like Du Plessis and Prinsloo, who have made Excel their friend).

She explains that the timeframe is dependent on the goal. She runs some projections of repayments and how to accelerate repayment by paying more than the required amount in the financial agreement and runs through various scenarios in the spreadsheet to get a sense of when she could realistically achieve that goal.

“I get a thrill out of entering the numbers and watching the graphs and charts change and move around,” says Prinsloo on using a spreadsheet to conduct his monthly budget. 

“Each month I will allocate my income between expenses, savings and spending. Once the amount has been allocated to each, I re-evaluate my current financial position and measure it against my monthly and yearly goals.”

Although a financial planner himself, Barend van der Westhuizen, provincial general manager at Absa Insurance and Financial Advisers, says he looks to his professional financial adviser, whom he’s established a solid relationship with over the years, for help on setting goals.

“He understands every aspect of my life (not just financial) and has developed a financial plan for me and my wife. Together we identified every need or goal over the short, medium and long term. On a regular basis we review this plan in order to ensure that we are on course to reaching our goals.

“You can only know whether you are healthy or not if you are diagnosed by a specialist,” Van der Westhuizen says. 

In the financial industry, this means appointing a financial adviser who can help you understand what your current financial health is. 

This is the most important step, according to Van der Westhuizen — a starting point where you formulate a plan based on your dreams and goals.Regular meetings with a financial planner and coach allow you to remain focused, according to Mwandiambira. 

He also points to the added benefit of getting affirmation that you are doing well, while being challenged by your financial planner when you miss the mark or fall off the bandwagon.Hugo highlights that timelines for short- and medium-term goals need to be realistic in terms of what you can afford and your expectations from the markets. 

She doesn’t fret over short-term market performance relative to those goals because this part of the strategy is out of her control. 

“What I can control is the amount I invest every month and our expenses. One needs to have long-term investment assumptions and stick to the plan.”

A long-term goal such as paying off the bond would be achievable in, for example, ten years, for Du Plessis. 

“I also work on shorter-term goals. For example, if we want to go on a big family holiday at the end of the year, then I need to save a certain amount per month to be able to afford the holiday at the end of the year,” she says.

Though he personally likes using spreadsheets for tracking and monitoring, Prinsloo is also a fan of the app 22seven, a free budgeting and investing app that helps you manage your money more easily and invest it more smartly. 

“You can track your daily transactions, set goals, get a breakdown of your net worth – all in one place.”

This is an extract of an article that originally appeared in the 4 July edition of finweek. Buy and download the magazine here or subscribe to our newsletter here.

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