It’s never too late to start financial planning

Many think that personal financial planning is something that only rich people can do – those who can afford to have a professional adviser to help them plan for their futures.

Angela Mhlanga, Head of Financial Consulting at Standard Bank says this is not true. “Personal financial planning is for everyone and you should start investing as soon as you get your first job,” she says. She says that personal financial planning is about making an investment timetable for your life.

“Financial planning is not difficult, but you do need to consider it carefully, because your needs will change as you get older. The good thing is that it is never too late to start saving money and planning ahead,” says Ms Mhlanga.

Getting the right advice on saving and planning is as easy as walking into any Standard Bank branch, where a bank consultant can offer you savings products available from the bank. “Standard Bank can assist with developing a habit of savings with the bank. Once the discipline has been established, customers can consider the services of a financial planner for longer term saving advice,” she says.

Ms Mhlanga suggests the following simple steps when you begin to plan your finances:

· Draw up a budget

A budget helps you see how much money you are spending and what you are spending it on. It can also help to show you where you can cut back on spending so that you can begin putting some money away for the future. For example, try to pay off one account. Once it is paid off you can use the money you used to pay on the account, to save toward your goals.

· Make a promise to pay yourself first

To save and make your money grow means that you should try to put money away every month. Pay yourself before you pay others, by putting some cash aside on a regular basis and then leaving it to grow.

· It is always best to start planning when you are young

For example, if you are still living with your parents then you should start making your money work for you by:

Putting money that you would normally pay towards rental or towards a home loan, into a savings account every month

Taking out a basic insurance policy that will pay out if you get hurt or disabled and can’t work anymore

Investing in a funeral plan that also makes an insurance payment to your family

Asking the bank to tell you about drawing up a Last Will & Testament so that you can have your money and personal belongings go to the people you want it to go to if you pass away.

· Remember that your needs will change as you start to get older

As you get older, you will want money that will build towards giving you a pension. You will want to put your money where it is safe. There are many options that can help you do this.

The most popular option is a retirement annuity. When the policy date is reached, and you are at the age when you can retire (55 years old), a retirement annuity will give you a monthly payment after you’ve stopped working. It also offers a once-off lump sum payment. The funds into which the monies are invested are run by asset managers and fees are payable both to them and to the planner. This should be disclosed to you at time of taking out the policy.

“You should shop around. It is important though to always consider reputable companies when investing your money and ensure that they are registered with the Financial Services Board,” Ms Mhlanga says.

· Get advice from the right people

Standard Bank has Financial Planners in most of the branches that can help you with savings and investments. Ms Mhlanga adds that you should make sure when talking to any professional adviser or broker that they are registered with the Financial Services Board and have the knowledge to help you.

Ms Mhlanga also advises that you should be smart about what products you make use of. “For example, while you should have a funeral plan, many people often buy more than one funeral policy, so that more than one payment will be made to the family. This isn’t necessarily the best thing to do. The insurance payout from a funeral policy may not be as much as if you invested the same money in other kinds of policies, such a life insurance policy.”

With your plan in place, putting money into a savings account regularly and leaving it to grow means you will build up a savings cushion. It is always important to speak to a financial planner when longer term goals such as pension are considered because inflation considerations need to be made.

“You can begin with a low-cost account like an AccessSave account that you can open with whatever money you have,” Ms Mhlanga says. “When you have saved R1 000 or more, you can then move this money into an account that pays even more interest, like a Standard Bank fixed deposit account.”

It’s important to remember that your money is not immediately accessible when it is invested in a fixed deposit account. When you open this account you tell the bank how long you want to leave the money in this account. This can be anything ranging from thirty two days to five years.

The benefit for you is that if you can’t touch the money for a long period of, say, five years, it grows quicker and this can be a good way to begin building personal wealth.

“At Standard Bank, we can help you decide how to get the best out of the money that you work so hard for. It doesn’t matter if you want to plan for your holiday, child’s university education, or you want to save for a pension. All you need is to take the first step. After all, it is your future that is at stake,” concludes Ms Mhlanga.

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