In a financial plan there are many elements – to start with, one needs enough money to live off – so one always has to start with a budget. Supplied

In a financial plan there are many elements – to start with, one needs enough money to live off – so one always has to start with a budget.

Many people think that they cannot have a financial plan because the money they have does not make ends meet. But it is always important to plan what you will do with your money and to have a budget, even if you do not have lots of money.

I have always been very disciplined with my money, but I didn’t always save. I did have debt, as I was always in the fortunate position to earn a guaranteed salary.

I would recommend to everybody to start their own financial plan by looking at debt first, because the rate that banks lend you money is typically far higher than any rate you could earn. My own plan was to not have any debt, and I am fortunate enough to be debt-free.

Then there are investments.

One should be disciplined and invest regularly in a diversified, balanced portfolio that include growth assets such as equities, some property, and a good portion of offshore assets. I believe in unit trusts, as I know that experts do a far better job of investing that I could ever do.

Of all the investments I ever made, my retirement annuity (RA) was probably the best, because at a 45% tax rate it means that the receiver is contributing towards my retirement. An RA also prevents you from dipping into your money.

Why not make use of all the opportunities available to you? I am thinking of the tax-free savings account. I have been investing in this from the beginning, and R33 000 tax-free savings every year contributes to a wonderful nest egg.

Another crucially important aspect of a financial plan, apart from saving and providing for your retirement, is to make sure you are covered in the case of any unfortunate incidents. Have proper life, disability, and dread-disease cover.

If I look at my financial plan, it looks as if it was executed very rationally, but I know that investments are emotional. You invest money that you have worked hard for and I find that it is best to put the investment decisions in the hands of an unemotional outsider, an expert financial adviser.

Although I work with investments daily, in my busy life I simply do not have the time to manage these. It is like the saying goes about a doctor with sick children, or a dominee with naughty kids. Therefore my share portfolio is managed by a stockbroker.

PERSONAL FINANCE