Importance of Personal Finance Management for professionals!

Lack of time, combined with a touch of procrastination when it comes to long-term planning, sees South African professionals often ignore one of the most vital areas of their business: personal financial management. Mike Jackson, CEO of PPS Insurance, talks about what professionals need to secure their retirement.

While professionals are adept at delayed gratification - many spent years studying while their peers earned salaries - far too many don't show foresight when it comes to their retirement.  This is a huge mistake when you consider that someone in a professional practice stops earning the minute he or she stops working.

It's apparent among many professional categories that their current positive high cash-flow might create a false sense of security, and personal financial management takes a back seat to everyday work pressures.  Retirement planning is often neglected as the thought of retirement may seem uncomfortable - yet it is inevitable!

PPS Insurance urges the professional community to speak to the experts when it comes to managing finances. Jackson says, "When it comes to your personal finance, savings, retirement planning and tax cannot be ignored but it is not always obvious what you need and how much you should be paying."

Some professionals take up employment in large organisations, and again create a false sense of security based on their current income. In encouraging people to form a portable, self-sufficient benefit base, Jackson believes professionals need to ask themselves these questions:

* What if I get sick?

* What if I have a motor accident or a sports injury?

* What if I am incapacitated?

* Am I insured for these possibilities?

* What if I dont have sufficient capital to retire?

PPS members have access to a comprehensive range of personal risk cover solutions, as well as Profmed, a medical scheme, catering to the needs of graduate professionals.  These solutions are essential for anyone who is self-employed, especially when you consider the costs of maintaining your practice in your absence.

Ever met a widow who said her late husband was over-insured?

"Policies need to be updated regularly," says Jackson, "especially as you head towards retirement. Make sure all your liabilities are insured, along with your bond. All your debt should be separately insured, too. You want to reach retirement age without debt."

This is where a financial adviser can be of assistance to busy professionals. An adviser can go through the critical questions every year and make sure that you are covered for all eventualities. You should be asking yourself the following questions:

* How much has my income increased by since I took out this policy?

* How much have my debts increased by?

* How much has my insurance increased by?

* Do I want the choice of whether or not to work after retirement age?

* Am I putting away 15% of my earnings every year?

* Have my personal circumstances changed? Eg. divorce, inheritance.

Jackson says that debt reduction is the key to long-term financial stability and growth. Young professionals have time to pay off study loans and bonds, but still need to put away 15% of their earnings if they hope to have a reasonable income in retirement.

However, professionals a year or two from retirement need to reduce their exposure to the stock market and move into a cash-based portfolio where they are immune to market fluctuations. PPS Insurance realised there is a need to pre-retirement options, and established a portfolio to protect its clients. "At this time," says Jackson, "It's time to move your yacht from the high seas into the harbour."

PPS Insurance provides sickness and disability benefits to over 70 percent of South Africas graduate professionals. Its membership has grown to over 140 000 graduate professionals over the 65 year lifespan. PPS Insurance is committed to providing unsurpassed financial solutions for graduate professionals.