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Cape Town - You want to be financially responsible, but it’s difficult to know where to start.
The number of financial and investment products on offer can indeed be mind-boggling, says Standard Bank’s head of financial consulting Angela Mhlanga.
You can make this task easier by looking at your lifestyle, your financial requirements and your future needs, and then matching these to appropriate products.
Mhlanga says that it’s never too early to start planning for your future.
“It’s important to also consider the impact a negative event like retrenchment, divorce or death could have on you and your family. Make sure that if such a thing were to happen, money would be the least of your or your family’s worries,” says Mhlanga.
Depending on your circumstances, you could consider the following products:
A short-term savings account
Every month, you should budget to put a portion of your income into an accessible savings account.
You can keep this available for emergencies, or to save up for a holiday or luxury item.
The general recommendation is that you should have the equivalent of three months’ earnings saved up as a cushion.
“This means that when unexpected expenses crop up, you won’t have to go into debt to deal with them,” says Mhlanga.
“The same applies to planned expenses – rather than spending on credit and paying off loans for luxury items, save up for them and earn interest on your money.”
Longer-term investments
It’s also important to plan for big expenses that might crop up in your future, like buying a car, paying a deposit on a house, or putting your children through school.
“You should start putting money away for these eventualities, even before you’re seriously considering them.
Speak to your financial advisor about an investment product and the term of investment to make sure that you’re earning the most from the money that you’re investing for the future. It will serve you well, even if you’re not yet sure what this future will be,” says Mhlanga.
A retirement fund
It’s never too early to start putting money into a retirement fund. The younger you are when you start, the less you’ll have to put away each month, and the more comfortable your retirement will be.
“Don’t put this off until you are older and retirement is more of a reality to you,” says Mhlanga.
“You may think it gets easier to save when you’re earning more, but it doesn’t. Life only gets more expensive as you take on more and more financial responsibilities. Your greatest gift to your future self is to start planning your retirement early.”
Disease and disability cover
Dealing with a debilitating disease or accident is one of the worst things a person can go through.
In the months or years that follow, financial matters can become your biggest concern.
With disease and disability cover, you can face your future with the confidence that an unfortunate event won’t derail you financially.
“It’s hard to consider the negative things that might happen to you, but these things can have an even greater impact if you don’t have these kinds of products in place,” says Mhlanga.
“Even if you’re young and healthy, the unexpected can happen.”
Income protection
If you become ill or are retrenched, your loss of income will have a huge impact on your life and on your family’s life. An income protection product will mean that you don’t need to worry about this.
“A loss of income is a devastating thing to happen to anyone,” says Mhlanga.
“An income protection product will pay a portion of your income for a certain timeframe to ensure that you can recover or job hunt with no additional stresses.”
Life insurance
Not everyone needs life insurance, but if you have financial obligations that will affect your family after your death, or if your family depends on you for their livelihoods, it should be strongly considered.
“Life insurance ensures that if something happens to you, your family will be taken care of financially,” says Mhlanga.
“This is one of the most important financial commitments a person with dependants can make.”
Short-term insurance products
If you’ve spent your hard-earned cash on items like a car or expensive electronics, you’ll want to ensure that if you have an accident or are the victim of theft, you’ll be able to replace them.
“Speak to your broker about the right kind of insurance for the assets you have,” says Mhlanga.
Medical aid
Whether you are young or old, healthy or poorly, single or the parent of a family of five, your health is your most important asset.
Ensure that you have access to the best healthcare by purchasing medical aid or hospital cover.
“You don’t ever want to have to think about money when your health is at stake,” says Mhlanga.
“If you can afford the day-to-day medical expenses, then simply purchase a hospital plan for you and your dependants, but the more money you spend on a medical aid, the more comprehensive your cover will be.”
- Fin24
The number of financial and investment products on offer can indeed be mind-boggling, says Standard Bank’s head of financial consulting Angela Mhlanga.
You can make this task easier by looking at your lifestyle, your financial requirements and your future needs, and then matching these to appropriate products.
Mhlanga says that it’s never too early to start planning for your future.
“It’s important to also consider the impact a negative event like retrenchment, divorce or death could have on you and your family. Make sure that if such a thing were to happen, money would be the least of your or your family’s worries,” says Mhlanga.
Depending on your circumstances, you could consider the following products:
A short-term savings account
Every month, you should budget to put a portion of your income into an accessible savings account.
You can keep this available for emergencies, or to save up for a holiday or luxury item.
The general recommendation is that you should have the equivalent of three months’ earnings saved up as a cushion.
“This means that when unexpected expenses crop up, you won’t have to go into debt to deal with them,” says Mhlanga.
“The same applies to planned expenses – rather than spending on credit and paying off loans for luxury items, save up for them and earn interest on your money.”
Longer-term investments
It’s also important to plan for big expenses that might crop up in your future, like buying a car, paying a deposit on a house, or putting your children through school.
“You should start putting money away for these eventualities, even before you’re seriously considering them.
Speak to your financial advisor about an investment product and the term of investment to make sure that you’re earning the most from the money that you’re investing for the future. It will serve you well, even if you’re not yet sure what this future will be,” says Mhlanga.
A retirement fund
It’s never too early to start putting money into a retirement fund. The younger you are when you start, the less you’ll have to put away each month, and the more comfortable your retirement will be.
“Don’t put this off until you are older and retirement is more of a reality to you,” says Mhlanga.
“You may think it gets easier to save when you’re earning more, but it doesn’t. Life only gets more expensive as you take on more and more financial responsibilities. Your greatest gift to your future self is to start planning your retirement early.”
Disease and disability cover
Dealing with a debilitating disease or accident is one of the worst things a person can go through.
In the months or years that follow, financial matters can become your biggest concern.
With disease and disability cover, you can face your future with the confidence that an unfortunate event won’t derail you financially.
“It’s hard to consider the negative things that might happen to you, but these things can have an even greater impact if you don’t have these kinds of products in place,” says Mhlanga.
“Even if you’re young and healthy, the unexpected can happen.”
Income protection
If you become ill or are retrenched, your loss of income will have a huge impact on your life and on your family’s life. An income protection product will mean that you don’t need to worry about this.
“A loss of income is a devastating thing to happen to anyone,” says Mhlanga.
“An income protection product will pay a portion of your income for a certain timeframe to ensure that you can recover or job hunt with no additional stresses.”
Life insurance
Not everyone needs life insurance, but if you have financial obligations that will affect your family after your death, or if your family depends on you for their livelihoods, it should be strongly considered.
“Life insurance ensures that if something happens to you, your family will be taken care of financially,” says Mhlanga.
“This is one of the most important financial commitments a person with dependants can make.”
Short-term insurance products
If you’ve spent your hard-earned cash on items like a car or expensive electronics, you’ll want to ensure that if you have an accident or are the victim of theft, you’ll be able to replace them.
“Speak to your broker about the right kind of insurance for the assets you have,” says Mhlanga.
Medical aid
Whether you are young or old, healthy or poorly, single or the parent of a family of five, your health is your most important asset.
Ensure that you have access to the best healthcare by purchasing medical aid or hospital cover.
“You don’t ever want to have to think about money when your health is at stake,” says Mhlanga.
“If you can afford the day-to-day medical expenses, then simply purchase a hospital plan for you and your dependants, but the more money you spend on a medical aid, the more comprehensive your cover will be.”
- Fin24
