WORKING OUT A FINANCIAL PLAN; 5 HABITS OF THE FINANCIALLY WISE

by TW Editorial

June 18, 2018

A financial plan is the development and implementation of total coordinated plans for achieving an overall financial objective’

A financial plan must have the following components:

(1)Capital accumulation for education plans, emergency fund, general family expenses and

Investment portfolios

(2)Retirement accounts

(3)Protection of assets against sudden death, disability long-term medical care etc

(4)Investment and property management

(5)Transferring wealth to the next generation.

Some of the tools used to achieve these goals include Shares and stocks, bonds and fixed income products, Mutual Funds, savings and retirement accounts etc.

A few practical steps to drawing up a plan are as listed below:

Where do I want to be financially in 5years or 10years? This objective will then drive the kind of plan you draw up.
Where am I now? Draw up a balance sheet showing your assets and liabilities. In very simple terms, things you own and things you owe. (Please note that you do not own a car or generator on a lease, nor a piece of land on which there is an extended payment option).
Involve your spouse or grown-up children. Share your financial commitments and resources with them. Always ensure you keep a family member, preferably your spouse or child abreast of your financial resources and agree on definite and achievable goals.
4. Discuss these goals with your personal banker or financial adviser. They will help you fine tune the objectives with your current situation and determine the instruments that will best achieve your goals.
Employ the services of a decent lawyer or accountant who will direct your affairs with your family’s best interest his priority.
Draw up an education plan for your children. School fees and mortgage repayments take up about 70{54d2fcdcd494adb6982253be6fe8d5492e5f586157f419110131714f9092ec60} of your income at any given point in time. This shows you how important it is to have a plan in place. Determine the schools you would like your children to attend, find out the total fees for a 4 or 6year programme and then work out how much you would need to save today to make up that amount when you need it.
If you don’t already have one, start an emergency fund account. Experts recommend you have an emergency fund that is the equivalent of your living expenses for at least 6months should you be out of work. In simple English, save at least 6months salary as your emergency fund
The last part of the plan will be a retirement plan. A very necessary but much-neglected part of our lives. What do you do when you have reached the age of 55 or 60 and can no longer stay in paid employment? How will you fund your daily living expenses and maintain the lifestyle you have been used to? It is your responsibility to open an account with a PFA and get your employer to contribute to this.

In conclusion, please consider the tips we have mentioned here and make a determined effort today to catalog your assets, discuss with your spouse and agree with your goals for the next five years. Then seek the services of a personal banker who will help you choose the investment instruments to achieve the goals.