Financial education will help you plan a better future

Financial wellbeing is a journey that requires planning. Create a dream of the type of financial future and independence you wish to have for you and your family.
Financial wellbeing is a journey that requires planning. Create a dream of the type of financial future and independence you wish to have for you and your family.

This week is my first article in Sunday World to discuss financial planning.

I am excited to be involved in helping readers understand the implications of financial planning.

Research shows that less than 6% of South Africans are able to maintain their lifestyle after retirement. This statistic has remained constant for many decades. The major reason for this low number of financially independent individuals is ignorance and lack of financial education.

I have great passion in this aspect of our lives and look forward to giving regular tips on simple steps to take, so that our financial wellbeing improves.

I would like to propose that financial wellbeing is a journey that requires proper planning. Suppose you plan to take a journey to the coast and set out to cover the Garden Route with family and, maybe, friends. There are so many considerations that should not be ignored. Some of these include the following:

  • First of all, you and family need to determine what the desired outcome of this trip is;
  • Decide on how many breaks you need to take along this long journey;
  • Will you have sufficient petrol for this journey?
  • Are your tyres appropriately inflated for the amount of load you will be carrying? Is there any need for new ones? Do you need to re-balance and/or align your wheels?
  • Do not forget the type of music you need to play to ensure that your passengers are adequately entertained.

The list of things to consider is endless. Similarly, your financial wellbeing journey needs to start with a dream and plan. The old adage "failing to plan, leads to planning to fail" cannot be emphasised any stronger. Here's a concomitant list of issues to consider to make the financial journey smoother:

  • You need to create a dream of the type of financial future and independence you wish to have for you and family (assuming you have, or plan to have, a family);
  • Break down the dream into manageable and achievable chunks consisting of short, medium and long-term goals;
  • How is your monthly cashflow structured? Do you have a proper and realistic household budget? Is there "month after payday" or do you still have some cash in your bank even before payday?;
  • Along your journey, there will be life-changing events (like child rearing, marriage, divorce, education, vacation, business venture, sickness, death etc.). Do you need to re-balance your financial position as these events unfold?;
  • Include a reward system in your financial journey where you would treat yourself nicely for having kept your expenses low, for example.

My contribution in this publication recognises that this is a journey and I am looking forward to sharing some practical "food for thought" ideas as we venture into this financial wellbeing trip.

My approach will be thematic as I seek to provide relevant financial topics each month. So, February was the month of love. A typical topic would be "running a household budget with your lover".

June is Youth Month and my topic would be covering millennials and their financial behaviour. Another interesting month is July where we would be unpacking the topic of savings. Let us not forget August being Women's Month.

My other strong passion lies in investments and the economic landscape. These factors influence the financial wellbeing and position of businesses and individuals. We will tackle some of the variables that impact on the economy and growth of our wealth.

We tend to be hard on ourselves even though there's evidence of optimism. For example, the exchange rate is improving, bringing some hope for SA Inc. Inflation appears to be tamed, providing opportunities for asset managers to meet their performance objectives.

Finally, in life you will face numerous challenges and obstacles, many of them unexpected. Setting long-term financial goals and objectives will force you to organise your goals and plans.

It will enable you to visualise possible roadblocks and prepare for a sound and balanced financial wellbeing.

- Sekese is a registered professional financial planner and a member of the Financial Planning Institute (www.fpi.co.za).
He serves on the Financial Planning Institute investments competency committee and was named the 2016 Financial Planning Institute's media award winner.

X