Have a plan and stick to it

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Time has passed since political drama caused havoc in markets yet again, this time with very serious consequences for the South African economy, consumers and investors.

“Economic storm clouds are gathering. More and more analysts and investment strategist are mentioning the dreaded ‘recession’ word, are talking about higher inflation ahead and interest rate increases on the horizon. It is an alarming situation but consumers and investors will survive the troubled times if they approach their finances with prudence,” says Godfrey Nti, CEO of the Financial Planning Institute of Southern Africa (FPI).

“South Africans are heavily in debt as reported in media in early April. To such an extent that some have started to pawn assets to keep cash flow going. CFP® professionals have skills and expertise to guide and support any consumer and investor. However, many think that it is only the ‘wealthy’ or top earners who can access financial advice. It is a goal for us to change this perception,” he adds.

David Kop, CFP® and head of advocacy and consumer affairs at FPI, has these five tips to help manage personal finances in the months ahead, as inflation drives prices up and reduces personal disposable income:

Draw up a budget

“Many people have no idea what they spend on beyond the big expenses like accommodation, motor financing, insurance and medical aid. A cappuccino here, movie tickets there, a fun day at a flea market can add it up to a large amount very quickly. Make a detailed list of your spend and review this against your income. Budget properly and stick to it,” says Kop.

Create a financial plan

“Again, this is something some believe is a luxury for the higher earners. Every person with dependants need to have a plan in place to make provision for unforeseen events and important issues like future education for children.”

Plan for retirement

“This is a key component of any financial plan. The state does not have the resources to support the entire nation once they no longer earn an income. This is one of the reasons why the government offers tax incentives to those who provide for their retirement themselves,” notes Kop.

Save for a rainy day

“Life always delivers surprises. The ideal is to have three to six months of your gross income in some sort of savings account that can be access quickly in cases of emergency.”

Don’t follow the herd

“Especially during times of market turmoil, people get panicked and decide on the spur of the moment to make changes to their financial plan. With the guidance of a professional financial planner you can develop a long-term plan suited to your particular needs. Most importantly, a professional, such as a CFP® professional, will ensure that you stick to it,” Kop concludes.