Financial planning 101: Six tips to help you start your financial plan for the new year

Financial planning can offer you a blueprint on how you can manage your money to secure your financial future. Picture: Freepik

Financial planning can offer you a blueprint on how you can manage your money to secure your financial future. Picture: Freepik

Published Jan 3, 2024


Financial planning is a journey, not a destination, a fact that is often forgotten when planning for your financial future, according to Janine Horn, a financial adviser at Momentum.

Horn said: “People may think that financial planning is not for them or they are too old to start planning their finances, but it is never too late to start taking care of your financial future.”

Here are six tips to help you get a head-start on your financial planning journey.

Start saving

Set your savings goals, short-term, medium-term, and long-term— without them, you don’t know what you are aiming for. Examples of short-term goals are a summer holiday or a new car, while examples of long-term goals are a new house.

Horn advises people to start saving towards an emergency fund, which can help manage any financial pitfalls.

Tyrone Lowther, head of Budget Insurance, recommends that people have three to six months’ worth of expenses saved up in their emergency fund.

Protect your income

Whether you are a full-time worker, part-time worker, business owner, or entrepreneur, income protection is necessary to help people protect their ability to earn an income.

“Income protection can be up to 75% of your net income and protected to age 70, and sometimes for the rest of your life,” Horn said.

Pay off your debts

According to Rita Cool, a Certified Financial Planner at Alexforbes, people should take a look at their debt and work out a repayment plan if it is a problem. Do a budget and identify what you can allocate to pay off debt, like credit cards and personal loans, so that you do not have debt when you retire.

Consult a financial adviser

Speak to a certified financial adviser to help with your goals and how much you need to get there, or just to help you make your money work harder for you, instead of working harder for your money.

Think of a financial advisor as a personal trainer — someone to guide you and keep you going when you might feel overwhelme — according to Paula Walker, a director and advisory partner at the Consolidated Wealth Group.

Have a valid will

It is false for people to think that if they have little or no assets, they don’t need a will, but they don’t think about what will happen to their car, money, or belongings.

According to Horn, having a valid, executable will means that upon death, even if it's premature, a will still needs to be in place.

There are a few key concepts of a valid and executable will:

– the way that your will is structured

– who are the witnesses of the will?

– the witnesses have not been mentioned in the will as recipients or beneficiaries of proceeds or inheritance.

Live within your means

People often think that they are invincible and don’t think of their financial future, but it's important that people learn to live within their means.

“Living within your means” speaks to setting up a structured and disciplined budget and a money plan that people will hold themselves accountable for.

You can live within your means by weighing up your wants against your needs and by paying yourself last. This means taking care of your debt, living expenses, savings, financial planning risk, and needs first, and then paying yourself.

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