What young professionals can do to master their finances
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JOHANNESBURG – Adulting is hard, especially if you’ve launched into financial independence during economically tough times.
It’s hardly surprising that the 2018 Old Mutual Savings & Investment Monitor (OMSIM) reveals that 41% of the metro working South Africans surveyed could not make ends meet at least once in the past year.
Tapping into credit when your finances are stretched is very tempting, but very risky, according to Lizl Budhram, Head of Advice at Old Mutual Personal Finance.
“Many young professionals too easily – and too quickly – start relying on their overdraft facility or credit cards to cover their living costs. It’s a decision they are likely to regret however.
“While credit may seem like the obvious solution, the truth is that loans and credit cards charge interest, which can accumulate at an alarming rate, if you’re not careful."
Budhram says many young professionals who need to pay their own bills for the first time can find the experience overwhelming.
“This list is long. There’s rent, electricity, groceries, clothing, transport, medical aid, insurance and maybe student loan repayments.
“This is where financial advice can really make a difference. The internet has a lot of personal finance resources available at the click of a button. But if you’re serious about developing healthy financial habits and laying a good foundation, young professionals should consider consulting a professional adviser.”
She adds: “Don’t wait until you’ve built up bad habits. You also don’t need to be a millionaire to afford financial advice – advisers are there to help and guide you regardless of your level of income.”
Any adviser worth their salt will start the process by focusing on your personal situation and financial goals. “Where do you want to be in a year or 10 years financially? Your goals are important and the more time you have to work towards them, the better. The most important outcome of a proper advice process is a clear financial plan backed by the right solutions to get you where you want to be in life.”
Budhram says finding a suitable adviser shouldn’t be a daunting task. “Start by asking friends or family for recommendations. Alternatively, make use of Old Mutual’s Find an Adviser site. Just remember that when comparing advisers you need to consider factors such as their qualifications, the levels of support offered, their objectivity, commitment and passion.”
If you need help with choosing the right financial adviser, Budhram says you can request a call back anytime.
Once you have made your choice, you can expect to go through the following process:
1. Life Stage
As a young professional, your individual situation is important. Your adviser will get to know you better to be able to offer advice customised for you.
2. Financial goals
You’ll also need to reflect on your dreams and financial goals. It’s easy to fall into the trap of thinking only about your immediate needs. Taking a longer view and knowing what your financial goals are can help you stay on track.
3. A financial plan
Your adviser will design a customised financial plan for you to follow in order to make your dreams a reality. Consider your plan as a roadmap to peace of mind.
Your adviser will recommend specific solutions in the form of products, policies or investments to help get you where you want to be.
5. Staying in touch
Lastly, remember life changes. You may switch careers, decide to marry, have children or move to a new city. When your situation changes, make sure you connect with your adviser to adjust your financial plan, if necessary. Remember too that life can take unexpected turns. Consider insurance to protect yourself against setbacks.