It’s never too late to change your financial position, but it does require you to overcome having an “ordinary” approach to money. Financial Adviser at Discovery Adam Helper says the most important advice he has received is: “Look after the cents, and the rands will look after themselves.”
“Becoming wealthy requires you to give value to your accumulated wealth, which means you watch your money more closely,” he says.
It’s important to have a long-term strategy in place to grow your wealth. You need to focus on accumulating appreciating assets, establishing a well-balanced portfolio of investments and protecting your wealth through insurance, Helper says.
Common mistakes to avoid
Spending before earning
It’s simple. If you don’t have the money, then don’t buy it. Credit facilities often have high interest rates and provide a false sense of security.
Not getting financial advice
Find a professional you trust who will have your best financial interests at heart.
Spending increased income on material possessions
When your income grows, rather invest in your retirement savings. Nothing beats the time value of money. Start saving early and let time and compound interest do the rest.
Not having the right money habits
Wealthier people get into the right habits early. It doesn’t matter how wealthy you might become, if your fundamental behaviour is not right from the start (for instance, if you aren’t saving) then you won’t achieve good results later in life.
Not preparing for worst- and best-case scenarios
A financial plan will look at risks to make sure you are covered for life-changing events that could prevent you from earning an income. It will also help you plan for the time when you want to wind down. Planning for these events will give you the financial cushion you need and ensure you have something for later years.
Helper offers the following tips for a healthier financial future
- Start early. As soon as you start working, irrespective of your income, start a plan. If you don’t have one yet, it’s not too late. Meet with a financial adviser and get a savings and investment plan in place.
- Do what you feel is right. Get professional advice, but don’t allow others to make decisions for you. You know what is best for your future.
- Check your needs. Do a financial needs analysis once a year to make sure your plan and your needs match up. Try and get closer to your goal every year.
- Save for now and for tomorrow. Have a saving plan for the short and the long-term. The key is to enjoy life while planning for retirement.
- Maximise your tax deduction. Use the financial assistance and tools available in the market to save.