Financial planning - you’re never too young or too old to start

The ideal time to start financial planning is when you start your first job, but if you have missed that window then the next best time is to start is now. Picture: Freepik

The ideal time to start financial planning is when you start your first job, but if you have missed that window then the next best time is to start is now. Picture: Freepik

Published Oct 11, 2023


Many South Africans think that having a financial adviser is something that is reserved for high income earners and that financial planning is only necessary when they start a family, and have ‘real’ responsibilities.

Stian de Witt, CFP, executive head of financial planning, NMG Benefits said that this could not be further from the truth.

De Witt said that financial planning should start the first time you get pocket money from your parents and if they have not done so then the next best time is to start is now.

“Early financial planning has a clear and positive impact on a person’s financial future. The sooner you learn to manage your finances, and to plan for the future, the more likely you are to be financially secure in your working life,” De Witt said.

Here’s how you can head start on financial planning.

Get help with your finances

According to De Witt, the first time you should talk to a financial planner is when you start your first job.

Don’t settle for the first person that wants to sell you a policy; instead, talk to an accredited financial adviser who does proper financial planning, and will give you advice without trying to sell you something.

According to Neal Sinclair, a Business Development Manager at Glacier by Sanlam, a successful relationship between a financial adviser and a client is less transactional and more relational.

Create positive spending habits

By creating positive spending habits you will be able to manage your budget better and improve your financial prospects.

To do this you need to ask yourself these questions: What is my cash flow? What is my budget? Can I sort my budget into obligations, needs and wants?

If you don’t know the difference between a need and a want, Farzana Botha, Segment Solutions manager, Sanlam Savings said that a ‘need’ refers to something essential like your home and groceries, while a ‘want’ is a nice-to-have, like a daily takeaway coffee or going out for lunch.

You can improve your spending habits by:

– making a list before going to the shops and sticking to the list

– actively shopping around for the best deals online

– doing your shopping once or twice in a month rather than making multiple trips to the store in the week

– trying online shopping to avoid the temptations of in-store shopping

Protect your income

De Witt said that when you are working, your biggest risk is not dying, but having an accident that stops you from working. Therefore, it is vital to have income disability protection.

According to Janine Horn, financial adviser at Momentum, 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.

With income disability protection, your income is assured if for some reason you are unable to work.

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

Save your money

The key to financial wellbeing is simple - do not live beyond your means and start putting 10-20% of your salary every month into savings.

Your first step should be putting savings into an emergency fund to cover a couple of months’ income.

De Witt said that people should then start saving towards retirement, and making investments. The earlier you start, the better off you will be in later life because of the compound interest.

Young people should avoid getting into debt so early in life by buying fancy cars or property. Instead, they should save their money to have a nice deposit to put down when they want to buy big-ticket items. By doing this, your monthly repayments will be more manageable.

As a final piece of advice, De Witt said that people should think of financial planning as an investment rather than an expense.

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