man calculating expenses and planning

Part 5: Two things EVERY person needs when it comes to their money

hayley parry

By Hayley Parry  August 17, 2016

These are the two things you need if you want to build wealth. 

This is the fifth in a seven-part series on how South Africans can survive a tough economy and build wealth in the face of inflation and price increases. Read other articles in the series here.

If I asked you what two things you need when it comes to your money, I’m guessing your go to answer might be “more” and “unlimited” or something along those lines? You see... I’ve done this before! And whilst I totally understand where you’re coming from, you may be surprised to know that more money will never solve your financial problems. Don’t believe me? There are numerous studies that show that a couple of years after winning the lotto, most millionaires are either back to where they started before they won, or broke. Countless number of soccer stars – both here and overseas – as well as singers and other celebrities often come out publicly saying they’re broke despite having earned enormous sums of money.

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It would seem that for most people, the hard part is not necessarily making the money – it’s keeping it. And that’s where these two crucial elements come into play:

1. A financial education As Money Coaches™ we often host live workshops where we teach people how to manage their money and become wealthy. Often, we’ll start our workshops by asking people how many of them have ever formally learned how to manage money. If we’re lucky, one or two people will raise their hands. They tell us that most of them learned about money at home, from their parents. And typically, no one wants to do what their parents did when it comes to money.

So what can you do about your lack of financial education? Quite simply, you must make a plan to get yourself one – whether you do it yourself or learn from a pro. There’s never going to be an ‘easy’ or opportune time so you have to make it a priority and set some time aside to master your financial future.

“Getting yourself a financial education is not a once-off event. It’s a process. The more you learn, the more confident and empowered you’ll become in your decision making. I like to use physical fitness as an analogy that everyone can understand,” says Gary Kayle, a Money Coach™ at The Money School. “The more you know, the more you practice – the better you’ll get.”

How do I go about getting a financial education?

  • Read this blog or the one at Truth About Money or any other personal finance blogs you come across. The more the merrier.
  • Listen to the radio: a lot of radio stations have personal finance/ investment radio shows where you can learn a lot from the experts they interview. Some stations also broadcast podcasts or blogs about the same content too so make an effort to research your options. A good place to start would be here: http://702.co.za/shows/9/the-money-show-with-bruce-whitfield
  • Books, magazines & newspapers: there are lots of authors who frequently write on this topic for a variety of publishers. Start somewhere with a topic that interests you and keep reading as you become more knowledgeable
  • Investigate personal finance courses online or at learning centres near you. We recommend you consider applying to do the financial education course offered on Truth About Money

The point is this: money management is a LEARNED skill. And we always recommend you learn it from people who know what, why and how to teach you about personal money management. Not from anyone who wants to sell you something. It’s important that you know the difference.

Because once you have a solid understanding of how to manage your money, you start to free up money to invest in building wealth. And for that, and help in protecting your family against unforeseen events, you’re going to need a financial planner you can trust.

2. A financial planner“20% to 30% of financial advisors are outright crooks,” according to Warren Ingram a financial advisor at Galileo Capital. So it’s critically important that yo u find someone who is not only a registered financial advisor (ask for their qualifications) but someone who has a good track record, is upfront about what they can and can’t do for you and your money and this is key – discloses how and where they’ll be making money for you. Ask them lots of questions and then interview another financial advisor and compare notes. You can start by getting names from people you trust – and ask them about their financial advisor.

If you’d like to remove all product-related ambiguity in this regard, we suggest you look for a financial advisor who charges you by the hour for his or her advice – much like you would a lawyer or an accountant – rather than having them earn commission on products they sell you. Don’t be shy about asking these questions. Good, honest advisors like them. Remember that you’re going to be telling this person all about your money. It’s fine to ask about how advisors make theirs.

And then the next step is possibly the most important one. It’s summarised beautifully by certified financial planner, Carl Richards, in this sketch:

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There comes a time when you need to take the plunge to get yourself a financial education, and a financial advisor. That time, is now.

The views and opinions expressed in this article are those of the authors and do not necessarily represent or reflect the views of 1Life or its employees.

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