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Tips to weather even the worst financial storms

Achieving financial stability is the ultimate goal for many South Africans.
Image: Shutterstock

Achieving financial stability is the ultimate goal for many South Africans – but factors like personal debt, divorce, health issues, retrenchments and the declining economy can make this increasingly difficult to attain. There is light at the end of the tunnel, though: the right guidance and tools offer several ways to become financially savvy.

“We recognise the immense pressure that South Africans are under to be financially stable during the pandemic. This is why we are committed to helping provide people at each stage of their life with access to proper financial education customised to their unique journey and financial needs. Once armed with this knowledge, people can begin to alter the course of their financial wellness journeys,” explains Katlego Gaborone, Momentum Metropolitan Financial Planner.

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As we kick off Money Smart week, here are Katlego’s top financial tips to best suit each age group:

Money tips for your twenties:

Many people in their twenties are still studying or have just started their careers and are finding their footing in the real world.

  • You’re not too young – get a financial adviser to help you plan, set realistic goals and invest your money optimally for the future.
  • Pay off your debt – like a student loan – as fast as you can with a monthly debit order.
  • Forget the Joneses and stick to your budget – only buy what you need and pay cash for it if you can.
  • Get a side hustle to earn an extra income – pay for expenses, pay off debt, invest or build up an emergency fund.
  • Invest your money and earn compound growth – no amount is too small, just start.
  • Job hopping is one thing but don’t play ball with your retirement savings – don’t cash out those savings, re-invest them when you change jobs.
  • Get life insurance and medical aid and protect your income – never say never, tragedy can strike anyone.
  • Create an emergency fund – put away three months’ salary so that you’re prepared if disaster strikes
  • Build a healthy credit score – a good credit score means banks will grant you a loan at a lower interest rate when you need it. Pay back the full amount due on your credit card, every month and on time.

For your thirties:

For many, this phase is when families are started, and long-term investments are made. ‘Think save’:

  • Think long-term and invest consistently – you don’t grow rich overnight.
  • Don’t put all your eggs in one basket – diversify your investments.
  • Bulk up your emergency fund so that no emergency will be too big for you to handle.
  • Make sure you pay off your credit card in full every month and steer clear of bad debt like clothing accounts.
  • Think comfortable, not extravagant. Don’t max out your savings when buying a house. An emergency may mean that you suddenly can’t afford your mortgage anymore. Leave some room to wiggle.
  • Make sure your life insurance and income protection can provide for your family.
  • Make sure you have an executable will that is updated to provide for your spouse and kids in case something happens to you.
  • Spend less than you earn, save and you’ll thank yourself in future.

Forties:

Many in this bracket are focused on saving for their retirement and living a comfortable life. Balance living and spending with saving and investing:

  • Increase your retirement contributions
  • Let tax work for you
  • Review the beneficiaries on all your policies
  • Review your insurance and will
  • Talk to your parents about their finances
  • Pay off high-interest debt
  • Treat yourself too – go on your dream holiday or do those home improvements
  • Teach your kids how money works – inculcate the habit of saving
  • Also, you want them to study, right? Create an education policy for their future studies.

“Even in these difficult times, there are many ways to counter falling into financial despair, and we are optimistic that with the correct financial literacy and planning, South Africans can prosper,” says Gaborone.

Katlego Gaborone, Momentum Metropolitan Financial Planner.

COMMENTS   6

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No advice for those in their 50s, 60s and 70s? They are in even more dire need of advice to weather financial storms :-). And they are often also more vulnerable to being stripped by high financial planning fees.

Here’s your advice: why are you allowing all your insurance payments to go up annually when the cover does not??. Why is your car and household insurance payment going up when your stuff gets older?? They have South Africans paying their WHOLE LIVES for insurances the will not be able to afford when they are old. Don’t forget your medical aid and “pet Insurance??” Don’t you wish you had divorce insurance. As you get older your need for insurance is LESSENING!!!! Remember 1 million Rand today is NOT 1 million in 20 years in fact it will have the buying power of R 125K.. How much did you spend on insurances and how much did you save?? Are you dying to get wealthy?????????????? Wait until you see what happened to your retirement annuity 🙁 SAD

“You’re not too young – get a financial adviser to help you plan, set realistic goals and invest your money optimally for the future.”

Not good advice for someone just starting out with, perhaps, just R500pm to put away. How much is that advice going to cost?

It would be far better to even just put that money into a low/no fee separate savings account from their day to day account while informing themselves about their longer term options

WRONG !! Banks have really not beat inflation in 20 years so everything around you goes up faster than your money. That’s why you keep drawing down all your savings your whole life. Dr. Debt

Read my comment again, carefully. Nowhere did I suggest that someone leaves money forever in a bank account. I said do that WHILE INFORMIMG THEMSELVES ABOUT LONGER TERM OPTIONS. Or perhaps they could just leave it under the mattress…………..or pay it to a financial advisor.

GET OUT OF DEBT BEFORE YOU GET THAT FINANCIAL ADVISOR. Many will sell you something whilst you are paying HUGE INTEREST on your debt!!!!!!!!!!!!!!!!!!!! You go through life paying more interest than you WILL EVER MAKE. Poor house!!!! 95% don’t make it ever wonder why??????????????????????????????

End of comments.

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