John Manyike is the head of financial education at Old Mutual. Picture: Supplied
John Manyike is the head of financial education at Old Mutual. Picture: Supplied

10 ways to run life’s financial race successfully

By Opinion Time of article published Nov 2, 2020

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John Manyike

Johannesburg - Some people view life as a competition in which you have to be seen to be doing better than those around you. To these people, showing that you are leading the race means spending money to buy things you don’t want or need to impress people you don’t like with money you don’t have.

The accurate measure of running life’s race is different. It is about doing the best you can and completing the race with enough money to sustain yourself through retirement and also leave a legacy.

Ultimately, the most important competitor in the financial race is the individual runner. If you ignore the pressure to impress others, the focus becomes improving yourself and your future and financial prospects in your own time. Not bothering about others means you are always the winner.

The top 10 financial lessons to come out of Old Mutual’s recent AMPD Studios Live edutainment series involving the South African music industry are:

1. Always remember to pay yourself first. Financial discipline begins with your first pay cheque. Making sure that a portion of your earnings is always deducted and paid into a savings account is the way to start building future wealth.

2. Live within a budget. This means buying what you need, rather than the items you want. If you spend money wisely instead of to impress others who do not count, you will always have funds available when you need cash.

3. Put your money into assets that work for you. Assets that become more valuable over time are better than having a fancy car, which steadily loses value, costs a fortune to maintain and has to be insured.

4. Always be prepared. Life never runs smoothly and being equipped with a short-term, medium-term and long-term savings and investment plan means that you will always be ready when the unexpected happens.

5. Read contracts and legal documents carefully and never allow yourself to be hurried when there is a legal document to be signed. Take it home, read it and if you do not understand something, get an independent professional to explain it to you.

6. When opening a business, separate your personal life and business life. Taking a regular pay cheque from the company and having it paid into a personal account means you always know your actual financial position and just how well the business is doing.

7. Try to diversify. By being skilled at more than one thing, you can create additional streams of income. This means that when one source does not perform well, you can benefit from another that is doing well.

8. Understand that during the various stages of your life, you will have different requirements. Your investments will also change, and this means having to alter assets to meet the challenges of the times. As there are hundreds of alternatives available, to make the most of your assets, it is wise to get professional advice and formulate a personal financial plan.

9. Invest for the long term. Depending on the investment you choose, returns can rise and fall as market conditions and interest rates change. If you panic and move from one investment to another, your earnings can suffer. Take professional advice, choose an investment, and stay with it. Panic is your worst enemy.

10. Keep your paperwork in order. Make sure you have a valid will so that the people who are dear to you will get the benefits you want them to have.

The most important competitor you will face in your lifetime is yourself. If you set the bar high, the chances are that you will achieve what you set out to do. The key to success and a happy future is being prepared to invest time in planning and setting objectives for the different stages of your life. Getting a professional adviser to help could be one of the best investments you ever make.

* John Manyike is the head of financial education at Old Mutual.


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