Planning for a Financially Secure Future
Do you want to make your life as financially secure as possible? Is it as difficult as you thought? Life is hard to predict, so it’s a good idea to plan your financial future in the same way that you might plan your future family life, or career. You might not know exactly what will happen in the future but you should plan for it as best you can. Even though plans need to change over time, having a plan means that you have thought carefully about your financial needs now and in the future, and are not just reacting to current circumstances.
The Majola family started out with a number of difficulties. The loss of their wife and mother was a huge shock. Dealing with the financial burden of her funeral, and all the other financial decisions that they needed to take as they worked through their grief, seemed overwhelming.
Baba made hasty decisions and so ended up in debt to the wrong kind of people. Themba struggled to resist material temptations with his first salary. Samke was unemployed and struggling to see a future for herself. Busi needed to finish matric and prepare for further studies.
However, the Majola family were lucky to have Lerato and Ma Ruby at hand. Both were always there to help the family navigate through difficult times and choices and provide helpful advice.
How do you go about planning for a financially secure future? Here are a few aspects that you need to look at.
Everyone who has an income needs to budget. This means that you work out how much money you have to spend, after you have covered all your important expenses such as rent and electricity. This is the most important tool that you need to develop financial security. It will give you the information that you need to work out how much you have to spend on insurance, savings, and extras such as clothes. This means that you might not be able to buy the fashion items you want every month but you will always be able to purchase necessities, like your food and electricity!
Set short-term, mid-term, and long-term financial goals as this is an important step toward becoming financially secure. If you aren’t working towards anything specific, you’re likely to spend more money than you should.
Look at your financial plan every year and review and update your financial goals. If you haven’t set goals before, now is the time to start. These goals will keep you on a firm financial footing.
It can be useful to get professional advice. Consider finding a trusted financial planner or advisor who can help you to manage your debt, set realistic goals and ensure you stay on target to meet these.
Short-term goals include setting a budget and starting an emergency saving fund. Paying off a credit card is also a really good short-term goal.
Medium-term goals include paying off any loans and getting yourself insurance cover. Another medium-term goal could be buying yourself a car or a house. Plan how you will save towards buying these items and how you will pay off their debt.
Long-term goals help you think about a time much later in your life. Planning for your retirement and increasing your savings plan are long-term goals.
Manage your expectations
Most people can’t buy everything that they want immediately. Manage your expectations and realise that it is always better to buy something when you have the actual money for it. When you use credit cards, clothing accounts and other hire purchase mechanisms to buy items, you are paying much more for them than if you paid cash.
Save the deposit for a larger item so that you have manageable debt to fund the rest of the payments. Don’t overload yourself with debt from various sources. If you do find yourself in debt, you might need the help of a debt counsellor (which comes at a cost) or even find yourself blacklisted!
Resist the temptation to spend all your money and remember that paying for something upfront is always the cheapest option.
Plan carefully for your future career. When you have an opportunity to study, choose something that really interests you and work hard to succeed. If studying is not for you, see what entrepreneurial opportunities are out there. Start small, manage your debt carefully and plan how your business will succeed. If you have a job, be mindful of what you really need in your life and look after your salary as it comes in. Do sensible things with it and see your money grow. Look for bursaries, start-up loans and other financial assistance that may be out there to help you get started.
Read every contract you sign with care. Read the small print and make sure that you understand all the aspects of the contract. This is as true of a contract of employment as it is for a gym membership. Contracts are legally binding and very difficult to break. Don’t sign one unless you are sure about it.
If it is an employment contract, know your rights but also make sure you know what your responsibilities are too. It’s great to be able to grow a job into a career which provides you with some financial security.
Having a saving or investment plan is another way to help you find financial security. You don’t need to start big. By putting small sums of money away on a regular basis you will start to earn some money through interest, as well as having a ‘nest-egg’ of money to buy large items, or for a rainy-day.
Once you have saved enough money, it becomes worthwhile looking at putting it into fixed deposits or other investment plans. This is to make as much interest on your money as possible.
If you find saving as an individual difficult, start by saving in a group with a stokvel, especially a stokvel that earns interest in a savings account.
This is an important way of dealing with issues that suddenly go wrong. Whether you have a funeral policy as Baba did, or are part of a stokvel that gives you some security, this needs to be a part of your plan. If something goes wrong, as it inevitably does in life, what have you organised to help you through that tight spot?
Car insurance is another important factor to consider. Look at getting comprehensive car insurance if you haven’t already got it. This will go a long way in covering any damage that might happen to you, your car and your passengers, as well as any other vehicle and its occupants, in the event of a collision.
Despite all these plans, we know that life never goes as planned! People lose jobs, get sick and find themselves in many difficult situations. You might need to go back to the drawing board and create a new plan when things change. Perhaps you aren’t always able to pay off your debt or save for retirement when things go wrong. But you can review and change your plan as time passes.
As you plan your financial path through all the ups and downs of life, you will see that both the small things you do on a daily and monthly basis, and the large things you do every year and over the decades, will help you achieve financial security.