You have a plan for your money: you want as little financial stress as possible, enough to support your family (in good times and bad) and enough to leave a legacy of generational wealth for your children and grandchildren. These are wonderful ambitions. But they need to be a little more personal to you and your family if you want to achieve them! The perfect plan is personalised, flexible and reviewed regularly.
Here’s how you can get your perfect plan!
Personalise your plan
You like mild peri-peri chicken, and your friend likes extra hot. You both like chicken, but with subtle (or perhaps not so subtle!) differences. We’re all different and have different financial needs. So, you need a plan that is designed just for you, to suit your financial needs and goals.
You may be single and want to make sure you have funeral cover so your family can give you a dignified burial and service without incurring any costs or taking on extra debt. Or you may have young children and want to make sure they are provided for and will have access to a good education if you are no longer around.
Take Sandy, for example. She is 40, and has life cover (R500 000), disability cover (R500 000) and dread disease cover (R400 000). Sandy has made sure she has funds for her family if she dies, and that if something happens to her such as becoming disabled or suffering from cancer, she will have funds to help her adapt her life and pay for general living and medical expenses. Sandy also has R50 000 funeral cover, which her family can use to pay for her funeral. Her plan is personalised around her needs.
To figure out what your needs are, you need to start with these steps.
You need to:
- Write down your money goals, such as “I want to make sure my family is provided for if I am not longer around, be debt-free and own a family home at age 55”.
- Work out your financial needs, for example how much life cover you need, with the help of a financial adviser or our online Financial Needs Analysis.
- Draw up your plan – which is the “how” – what you need to do to meet your needs and achieve your goals, again with the help of your adviser. This will include having insurance cover such as life and funeral cover, as well as making provision for savings and investments.
Make sure your plan is affordable
You don’t need a grand plan that looks fabulous but is completely unattainable. You need a plan you can afford. Sandy, in our example above, pays just R390 a month for her cover.
This is really important. You may find that all your ambitious goals require more than you can currently afford. Rather tone them down to something more affordable than trying to achieve the impossible. If you set goals that are impossible to reach, you’re far more likely to abandon your plan altogether. Follow the advice of tennis legend Arthur Ashe: Start where you are. Use what you have. Do what you can.
You need to:
- Set up a budget.
- Include insurance, savings and investments on your budget – they shouldn’t be an afterthought!
- Make sure your budget balances – re-do it if it doesn’t, or if you are short of income, think of ways to earn more.
Make your plan flexible
At age 12 your child wants to be a doctor, at age 14 an Olympic swimmer, at age 16 a virologist. They matriculate and become an entrepreneur. You may decide to change career paths in your 40s and require some extra funds to upskill! Or you may get divorced and remarry – and acquire a much larger family, which means you need more life cover and adding additional members to your funeral policy.
Life changes, often for the better, although sometimes there are tough times to get through. So, you have to be able to adjust your financial plan when your circumstances change. Your plan won’t be set in stone, and it’s important to set it up so that it adapts and changes as you change.
You need to:
- Include emergency savings in your budget (to help you through tough times).
- Make sure your financial products have room for flexibility – for example, being able to add additional members to a funeral policy, reduce premiums and/or cover if a policy becomes too expensive.
- Review your plan regularly – at least once a year or when your circumstances change – if your family expands, or you get divorced, for instance – and to check if you qualify for any benefits such as additional life cover.
Get help from an expert
Your financial plan should be detailed, specific, flexible, tailored to your needs and goals. Getting all of this right is a job where an expert can add invaluable advice. A financial adviser is an expert who can show you what’s affordable and what is appropriate. They can help you review your plan to see where it can change, if it needs to.
Your financial adviser can also encourage you when you waver and want to spend a windfall or an increase rather than saving it! And if one of your goals is to leave your family generational wealth so they have a financial head start in life, a financial adviser can guide you and show you how to achieve this.
You need to:
Contact your financial adviser OR 1Life’s skilled consultants for help with your perfect plan.
Start today, with what you have
You may not have all the resources you need or be able to afford as much insurance or savings as you would like. That’s okay. What’s far more important is drawing up an affordable plan that matches your needs and helps you to create generational wealth for you and your family. And most importantly – make sure you draw up a plan you will follow.
Now that’s your perfect plan!