Most people have a unique bucket list of adventures and achievements
they are keen to experience in their lifetime. Some include trekking up Mount
Kilimanjaro, others long to take a hot air balloon ride over Cappadocia in
Turkey (In the photo above) or watch the Monaco Grand Prix live in person.
No two bucket lists are alike, but there is one item that adults of all
ages need to consider including on it, and that’s developing a storm-proof
financial plan.
A robust long-term financial plan will not only empower you to make
those bucket list items a reality, it will also enable you to leave a
lasting legacy for the people you love.
The younger you are when you put those plans in place, the better.
It’s easy to be distracted by things that give instant thrills like a new 4x4,
but there are significant long-term benefits for those who plan ahead and delay
some of these thrills. (Delayed gratification apposed to instant
gratification).
A key motivator for savers is compound interest. The sooner you start
saving, and the longer you save for, the greater the positive impact of
compound interest on your savings. As you get to earn interest on your
interest, it accelerates the rate at which your savings grow.
When you are young, your overall financial dependents and
responsibilities tend to be lower, which means it’s the ideal time to start
investing in your future and lay the foundations that will enable your
money to grow.
Ingraining financial discipline in your daily life when you are young
also helps to make saving an effortless habit. You get used to paying yourself
first to amplify your future wellbeing.
The first rule of building a stable future that will take you through
the various stages of your life in comfort and style is to decide what you want
your money to do for you.
Answering this question will help guide every financial planning
decision you make. For instance, if you decide that you want to retire early,
this will shape your investment strategy.
Here are a few steps you could take to amplify your financial future:
• Establish exactly how much money is coming in and out every month
• Work out a plan and a budget that includes setting funds aside for saving and
investing
• Control spending so you don’t spend more than you earn. An overdraft and
buying on credit may help raise your lifestyle but they are very costly
• Set up debit orders for your fixed monthly expenses as well as your savings
and investment accounts
• Save for unexpected short-term emergencies as well as retirement
• Invest in insurance: life insurance as well as risk cover. Unexpected
curveballs are a part of life and being insured helps protect you and your
loved ones from financial setbacks
• Guard against making hasty and costly financial decisions in response to
volatile markets. Stick to your financial plan and check your investments at
set times
• Speak to a certified financial adviser about balancing your investment
portfolio so that if the value of some investments dip, others will compensate
for this. Avoid having all your assets in one basket. Diversity is key
• Create a ‘life file’ which lists all your accounts, investments, passwords
and people to contact about financial and personal affairs
• Get advice on drawing up a will, funeral and other insurance
There is no doubt that a professional adviser will help to ensure that
all the essential elements of a financial plan are covered.
Music legends speak out
J Something and Sipho ‘Hotstix’ Mabuse were among the legendary artists
who shared their wisdom and financial life skills in the sixth episode of the
Old Mutual AMPD Live series, now available on YouTube.
Sipho ‘Hotstix’ Mabuse stated that his royalties are keeping him alive,
but if he had known then what he knows now about money, he would be a billionaire
today!
J Something was clearly financially smart from a young age. “The first
thing I did with my initial paycheque was to get a retirement annuity. It was
nice to know that it was there when I needed it and I was providing for my
future,” he says.
Disclaimer: This article is for information purposes only
and is not intended as giving advice.
EB Brokers is an authorised and licensed Short term Insurance provider and we
are not authorised to offer services on
Life insurance or investments.
We simply wanted to share this information as there is content displayed that
would add value.
Credits for the article goes to- FA News, AMPD Studio’s and John Manyike, head
of Financial Education for Old Mutual.