Financial Plan this year

If you are anything like me you have already formulated a new plan for this year. You have set new goals and categorised them for the year ahead. Emotional, physical, relational and spiritual ones. In this post I want to focus on a financial plan to make sure you have covered all your bases. This will also give you some ideas to discuss with your Financial Advisor when you meet. I created an acronym for this TIRB -YW. Ok, seriously? It sounds like some Chinese code you need to open the backdoor of some doggy club in the Bronx. But, remember it! You don’t want to be stuck in a dark alley in the Bronx without this code! Every item in this plan should be covered. They are not in any order of importance, the important thing is that they all should be included in your plan.

TFSA – A tax-free savings account! ALL the profits, interest earned and dividends from this account is going to be tax free. There are not a lot of things we get for free from our government. You have to make use of this opportunity! If you save R3000 per month. It will give you your annual maximum of R36 000 per year. 15 years from now you will be forever grateful you started with this account! There are some rules around this account that you need to familiarise yourself with but please open one. All the major banks have them!

Insurance – Make sure you have short term insurance for your car and belongings and life insurance if you have any dependants or debt. You can also get disability insurance if you get a life-threatening disease or have an accident. Speak to your financial advisor about this. Don’t forget funeral cover. These days a funeral can easily cost about R30 000. You don’t want your family to have to fork out that cash while they are mourning your death. Everyone dislikes paying insurance but no-one has ever regretted it when they have an accident.

Retirement – You are going to get older. Your skills will probably become out-of-date or you will become too expensive to employ. You don’t want to work 50-hour shifts at the age of 70! Plan for retirement. Your TFSA should definitely be included in this plan but the rule of thumb is that you save at least 15% of your monthly income for retirement. The sooner you start the better! The law of compound interest ensures that when you start in your 20’s you will have almost double more money than someone who started in their late thirties. 

Budget – Set up a realistic budget and track your spending. Make sure you know where your money is going and decide whether it is going to the right places. Keep in mind Income less expenses = Surplus or Deficit and if you have a limited income you need to limit your expenses otherwise the math doesn’t add up. It is not rocket science!

Yourself – Invest in yourself. You are your own best brand. Buy books (on kindle they are cheaper) enrol in online courses, get a mentor or learn a new skill. In this age of ever-changing, you will have to develop and grow yourself on an ongoing basis. Nobody else will do it for you! Keep in mind there is already someone out there with your skill-set and qualifications that is growing themselves. Make sure you do the same so that you don’t fall behind the pack.

Will – Get a will. If you have no debt or dependants this might not be an issue yet, but if you do and you love your family even 1%, please, set one up. You can do this at any of the major banks or with your financial advisor. This will ensure peace of mind for the loved ones who stay behind.

So, you have the Chinese code now TIRB-YW. Make sure you remember it and get a bulletproof financial plan this year. You will need that bulletproof vest in a dark alley in the Bronx.