We asked Priya Naicker, Advice Manager at Old Mutual Personal Finance, to offer some guidelines on how to stick to your financial plan. These are her top tips.
1. Recognise that a robust financial plan is a tool to help you create the life you want. We use sport watches to set fitness goals, track progress and take action to achieve desired results or correct problem areas. In much the same way, a financial plan helps create a focus on financial wellbeing. It should be part of your life and updated regularly to reflect where you are.
2. Develop a relationship with your money by understanding where you spend and why. Many people are afraid to approach budgeting because they’re scared of what they’ll find. However, this is a powerful part of understanding your approach to spending. It empowers you to identify priorities and balance your current needs with future plans. This helps create spending habits from a position of informed choice rather than impulse or reaction.
3. Create goals that excite you and then enjoy the process of planning for them. Planning and taking action to achieve your goals (even in small steps) turn them from simply being desires into possibilities and realities.
4. Make sure to protect what you already have. We often underestimate our current assets, especially when they are less tangible. The ability to earn income generally funds all of our current and future expenses. This makes it our most valuable asset. Being in a position to fund unexpected health costs without dipping into savings also helps protect your value and keep goals on track.
5. Tackle your current debt and commit to not incurring unnecessary future debt. Debt is an extremely expensive way to fund needs and wants. To see just how expensive, add up the interest for one month’s debt and multiply that by 12 to see the approximate interest you will pay in one year. This can be a frightening amount! Pay your debts off one at a time, starting with the most expensive debt first. This will instantly create more available cash.
6. Partner with a great financial adviser. In our current world of information overload, accessing expertise and professional advice is key to creating a customised financial strategy. Your financial adviser can work with you not only to create a financial plan that will serve as a roadmap to achieve your goals, but also to serve as a personal financial coach throughout the course.
7. Get started. When you’re tempted to slip back into bad spending habits, simply remind yourself why you are doing this to stay focused. The reward? Being able to enjoy the fruit of your work now, while still eager for a promising future.
For more valuable advice on how to create wealth and manage your finances to meet your goals, visit: www.getgreatadvice.co.za or come to one of our Old Mutual events for practical tips from financial experts.