Document 221536

Date : August, 01 , 2010 Publication : Destiny Page Number: 168-171
Personal Finance Guide
i% / r i i
How to Become a
There's no fail-safe "blueprint" for acquiring wealth. But if you learn from the
lessons of experts, the greats and those blazing new trails, you could pick up
some crucial markers
Ashley Bryant Wagner, a Personal
Financial Advisor w i t h O l d Mutual
PFA, highlights five essentials:
• Always pay yourself first. T h i s
w i l l teach you to be more
responsible w i t h your money.
• Have a clear idea o f your goals
and what you're saving for.
• Knowledge is power. Do you
know exactly what you earn and
where your money goes?
• Getting out o f debt is crucial. And
once you've done that, slay out o f
debt, as far as possible.
• T h e amount o f money you invest
isn't as important as the time you
leave it i n the market to grow.
Many people ignore their
personal finances and refuse to
budget. They use their credit cards
to supplement their income and
have no emergency fund to d i p into
in tough times. And they don't save.
Wagner suggests you start controlling your money by writing your
financial goals and reviewing this
plan every six to 12 months.
I le also offers the following
simple, but effective tips:
• Spend less money.
• Pay cash for purchases.
• Ignore credit card offerings.
• Pay off credit cards.
• Buy on sale.
• Don't be swayed by attractive
offerings. T h i n k it through.
• Avoid instant gratification. Do
you really need that new leather
jacket right now?
1 )omini(|ue Siott, Business D e velopment Executive at insurance
provider PPS. l>clicves one o f the
"few positive effects o f the global
financial crisis has been a renewed
focus by consumers on the health o f
their financial affairs". Part of that
process is taking a long, hard look at
your personal wealth plan.
"One o f the biggest factors is
planning for your retirement,"
says Stott. " I n order to combat the
danger o f retiring without enough
money, it's important to undertake
a financial needs analysis. T h i s
w i l l identify how much money
you need to retire comfortably and
whether you're on track with your
current retirement plans."
A financial needs analysis w i l l
also expose any glaring gaps in your
planning pr<K:css. For example, says
Stott, a "common trap many people
fall into is viewing their house as a
savings vehicle. When you see your
house appreciating from its original
purchase price, it's easy to feel cashrich. But you'll still need to live
somewhere i f you sell it. and paying
rent can quickly deplete savings."
She adds: "One of the best ways
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to plan for your future is to speak
to an independent financial advisor.
Choose one who'll offer guidance
when the going gets tough. A n d ,
once you have a plan, stick to it."
Before you increase your wealth, it's
important to increase your worth.
Krica Stuart from Liberty Group
Advisory Services says that for
many South African women, the
link between their career decisions
and their financial aspirations is
often blurred. "For most women,
landing a job straight out of school
or after university is the first major
objective - we probably don't think
about our career aspirations initially.
Eventually we get experience
i n a certain field, but we find it
difficult to step out o f it and try
something new."
Stuart's approach is practical.
" W h e n you start working, it's
best to stay in a job for t w o or
three years. T h e n you need to
look at your skill set and what
you're earning and benchmark
this against what other companies
arc offering for the same skills and
level o f experience."
Start by speaking to a recruiter
about the marketability o f your
skills, look at newspapers and go
online to see what jobs are adver-
Date : August, 01 , 2010 Publication : Destiny Page Number: 168-171
tiscd. Sometimes a career change is
the only thing that will give you a
bcttcr-rhan-inflation increase.
Don't wait for things to
happen - IK- proactive and make
them happen. Take steps to own
your career and achieve your
financial aspirations.
Stuart herself made a radical
career move just under a decade
ago. "I was retrenched from my
scriptwritingjob in 2001 and was
initially very stressed about it, but
it ended up being the best thing for
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IVrsonal Kiiumcc (iuide
me because it forced me to
rc-cvaluatc my career."
She also stresses that it's important not to be afraid to negotiate
for a higher package, based on your
skills and strengths. "During the
negotiation phase of a new job. >
Date : August, 01 , 2010 Publication : Destiny Page Number: 168-171
P e r s o n a l Fi nance Guide
women tend to focus on things like
first step i n gauging your disposable
creches and maternity leave policies
income. Capitec suggests this
idea i f you have difficulty sticking
to a savings plan, as they limit the
and neglect comprehensive discussions about future financial oppor-
five-step plan o f action:
access to your money.
• Start a finance file where you
can store your receipts and
" N o matter how small the
amount - even just R20 a month,
tunities with the company. T h e y ' r e
also too quick to apologise and back
down when having difficult discussions about money. Men are more
confident in their skills and know
what they contribute to an organisation. Remember, the more experi-
bank statements.
if that's all you can afford - it's
• Add up your monthly after-tax
income (eg salary, overtime
• Add up your necessary monthly
expenses (rent. bond, car payments, policies, school fees, living
empowered you'll be."
Stuart offers these tips for
expenses, petrol, medical bills.
that will enhance your skill set.
• Study further, even i f you have to
do this part-time while you work.
• Explore the learning or upskilling
opportunities i n your company.
• Once you've upped the ante in
your salary package, turn your
stresses Fischer.
ence and skills you have, the more
increasing your earning potential:
• Enrol for a course or qualification
never too late to start saving,"
telephone, water and electricity,
bank charges, entertainment).
There's a distinct difference
between saving and investing.
Saving is a habit of p u t t i n g money
aside each month: investing takes
• Add up your annual expenses
that one step further and enters the
realm o f wealth creation.
(eg T V and car licences).
• Deduct your expenses from
For Candice Paine, 1 lead o f
Retail at Sanlam Investment
your income.
Management, the need for an
T h e n ensure you always pay your
debts first and settle the interest
before assessing your short-, medium-
investment plan created in
conjunction with a reputable
and long-term savings goals. Get
financial advisor is key - and you
shouldn't change it, or divert from
into the habit o f saving by setting
up a debit order from your transac-
it. " T h i s plan should spell out
your financial objectives and the
tion account into your savings
investment performance you need
account. Capitec also suggests
saving bonuses or overtime
to achieve to meet them. A key
component o f it is setting a realistic
payments, rather than blowing
them on impulse buys.
time horizon. T h e plan should take
into account not only the returns
you need, but also the risks you're
every R100 earned. But it's vital t o
Remember, your approach t o
saving depends on your goals and
put something away for a rainy day.
Carl Fischer, Executive: Marketing
time frame. Fischer breaks it down
as follows:
and Corporate Affairs at Capitec
Bank, recommends sticking to a
S h o r t - t e r m : I f you need
attention to wealth creation.
"Start saving. Speak to a financial
advisor about the best product out
there for y o u , " says Stuart.
D O N ' T S P E N D IT - S A V E I T !
According to Capitec Bank, most
South Africans save only 2c for
prepared to take. For instance.
how do you really feel about losing
money?" she says.
A " r i s k y " investment is usually
choose a savings plan or money
market account that gives you
regarded as something like equities.
"because they can be volatile and
For example, it w i l l help ensure
that important debts such as rent
immediate access to your money,
should an emergency arise.
L o n g - t e r m : Consider a 32-day
you may lose money, particularly
during times of turbulence and
and loans arc paid before you
consider buying luxury items."
notice account, savings policy or
unit trusts. These offer a lower
Fischer says identifying your
current spending patterns is the
risk, biii higher potential payouts.
Longer-term options are also a good
careful budget. " T h i s w i l l guide
your spending in a responsible way.
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uncertainty", explains Paine.
"1 lowever. 90 years o f return data
show they've delivered the best
results over time."
I n contrast, investing in money
Date : August, 01 , 2010 Publication : Destiny Page Number: 168-171
market funds or cash is often perceived as the "safest" investment
option. I lowever, says Paine: "In
reality, cash exposes investors to the
less obvious risk of their investment
not keeping pace with inflation,
which means the real value of your
money is eroded over time."
Paine highlights these
cardinal rules:
Stock markets aren't "get-rich(juick schemes". Few investors
become wealthy on the basis of stock
tips or trying to time the market.
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Personal Finance Guide
It's much more important to
consider the underlying value of
the stoek market than deciding
whether and where to invest. It's
usually wiser to opt for a professional investment manager with a
proven performance track record. •