Thrift planning key to comfortable retirement

In today's interconnected globe, it seems that anything we do has an immediate and direct consequence on something else.

In today's interconnected globe, it seems that anything we do has an immediate and direct consequence on something else.

Consider your own personal status. Does your present money spending affect your future finances?

This is a valid statement when one is considering the purchase of an expensive item such as a car. When a large amount of money is spent on an expensive item, the capital is no longer available for investment and cannot generate income and-or potentially grow its value.

Taking a look at smaller decisions, for example, how much money should one spend on a vacation or stop off for a drink on the way home from work every evening. Could these actions influence your nest egg? The few rands spent on a daily basis on a drink times the number of days of work a year, could very easily surpass R3500.

Where would you prefer to invest your money; in drinking or in your future pension?

In our daily routine, the larger and more long-term synopsis of our needs and wishes sometimes gets distorted.

That's why it's so crucial to have a budget as well as a financial plan.

There is no harm in spending money as long as you can come up with the money to do so.

Complete financial planning extends further than stock picking. It assists the individual in developing sound techniques for short- and long- term budgeting, it allows us to prioritise our wants, and it encourages us to sensibly place a value on our money.

Without a specific and detailed investment plan and strategy you might find yourself travelling pointlessly and never know if you actually arrived. As the saying goes, "If you don't know where you're going, any path will get you there". The first stage is to establish long- and short-term monetary goals: retirement, education for offspring, a new house and new car. Then one must determine the best path to follow to achieve these goals.

In planning, aim to be as concrete as possible. If your plan is to retire in 10 years time, and your estimated retirement needs, are R160000 a year, you must be certain that this sum of money can be withdrawn yearly from your investment portfolio during the estimated lifetime of both you and your partner.

Income, budget, savings plan, and an investment strategy should all operate in union with one another. Overspending one month can result in not meeting saving targets.

Not saving enough might then result in not being able to diversify the asset allocation in your portfolio.

A financial plan does not exist in a vacuum. Your behaviour, as well as that of the market, will establish how soon and how well you meet your financial targets.

l Bryan Hirsch is chief executive of Pioneer Financial Planning. Visit or e-mail for more information.