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Understanding money matters and having fun with it

14 November 2016 Francois le Roux, FPI
Francois le Roux, CFP® professional from FPI.

Francois le Roux, CFP® professional from FPI.

Our financial habits and perceptions of money have reportedly already been formed by the tender age of seven years old. This means our early childhood experiences have a lasting impact on our financial decisions in adulthood. Subconsciously you have a financial blueprint embedded in your DNA which guides every financial decision you make.

Francois le Roux, CERTIFIED FINANCIAL PLANNER® /CFP® professional from the Financial Planning Institute of Southern Africa, says he is always intrigued by how little time most people spend on understanding money matters. “We work for decades, and spend many hours a year doing so, but how much time do we set aside annually for financial planning? We certainly don’t plan to fail, but maybe we simply fail to plan.”

Here le Roux provides tips to help you rethink your relationship with money:

1. Set goals for yourself from the day that you start earning an income

Successful people are goal-oriented and add structure to their plans. So for example, don’t just plan to get rid of debt, put a time frame on it as well, and manage it accordingly. The goals you set are the goals you’ll get!

2. Don’t live above your means

Many people, far too many people, can’t afford the lifestyle they lead. If you are in this category, you are treading on dangerous ground. It is easy to raise your standard of living and to escalate your spending accordingly, but it’s not sustainable. Although it’s very difficult to drop your standard of living, it is important to make sure that your lifestyle costs lag your income growth. Rather be a compulsive saver than a compulsive spender.

3. Plan for retirement

If you forget everything else, remember to start saving for retirement as early as possible to benefit from the immense value of compound growth. Time in the market will then become your best ally. Proper retirement planning is the greatest challenge for most consumers.

4. Have fun

It is possible to strike a balance between living sensibly and enjoying life. You just need to assess the merits of various options and plan accordingly. Depriving yourself of some pleasures now will be of great financial benefit over the long term. Financially, we can't live as if today was our last day. You have to think and compare what you spend today against what you want to spend in the future. Finding the correct balance is an important step to achieving financial security.

5. Get help

Contact a CFP® professional to help you understand the implications of your financial decisions. Lifestyle financial planning puts you at the very center of a comprehensive financial planning process, starting with questions about your hopes, goals, dreams and aspirations. Ultimately, these are translated into strategies within a holistic financial plan.

There are over 4 600 highly qualified CFP® professionals in South Africa. To find a CERTIFIED FINANCIAL PLANNER®/ CFP® professional in your area and for more tips on financial planning, call 086 1000 FPI (374) or 011 470 6000. You can also join the Institute’s online community on Facebook (Financial Planning Institute of Southern Africa) and on Twitter (@FPI_SANews).

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