KEEP UP TO DATE WITH ALL THE IMPORTANT COVID-19 INFORMATIONCOVID-19 RESOURCE PORTAL
FANews
FANews
RELATED CATEGORIES
SUB CATEGORIES All | 

Seven cures for a lean purse

16 September 2020 Fiscal Private Client Services
Gavin van Dyk, Director at Fiscal Private Client Services

Gavin van Dyk, Director at Fiscal Private Client Services

- Age-old money lessons from 1926 that apply in 2020

There is much uncertainty in the world today and the effects of the coronavirus pandemic has had a significant impact on the financial and emotional well-being of many South Africans. COVID-19 and the consequent lockdowns have plunged many countries into recession in 2020 with the steepest per capita income contraction in many decades.

While an alarming number of jobs have taken a tumble in these turbulent times, the role of a CERTIFIED FINANCIAL PLANNER® has never been as important. The pandemic has brought an opportunity and a dire need to help people once again consider their personal relationship with money, their money-habits and the emotional issues relating to their finances. This is according to Gavin van Dyk, Director and CERTIFIED FINANCIAL PLANNER® professional at Fiscal Private Client Services.

“Although there is a lot to be said about revisiting one’s financial plan, providing for sufficient liquidity and an appropriately diversified portfolio aligned to your personal cash flow needs and risk-adjusted return requirements, some of my recent discussions with clients have reminded me of a classic book on personal finance. It was a gift to me when I was a teenager in the early-eighties and the lessons are as relevant today as when they were first written.

“Richest Man in Babylon is a collection of short stories and parables written by George S. Clason in 1926 highlighting important principles of money which still apply in 2020 and is well worth reading prior to engaging in a comprehensive financial planning exercise,” explains van Dyk.

The key lessons come from Arkad, the proclaimed richest man in Babylon at the bequest of the King he shares his “seven cures to a lean purse” so that both individuals and the community can benefit from his wisdom.

1. “Start thy purse to fattening”
Live on nine-tenths of your earnings. Pay yourself first by saving at least 10% of your income which in time will provide you with income bearing investments. By foregoing certain non-essential purchases now, you will accumulate wealth over the longer term. You will also find that once you live on nine-tenths of your earnings, you will manage just as well as before and saving a larger portion of your earnings will become easier.

2. “Control thy expenditures”
Live within your means – do not spend more than you earn after savings. Lifestyle inflation is considered an ‘unusual truth’ of humanity - what each of us calls our ‘necessary expenses’ will always grow to equal our incomes unless we protest to the contrary.

3. “Make thy gold multiply”
Invest wisely – invest in appropriately diversified investments, taking advantage of time and compounding returns. Build a portfolio, which over the long-term will provide you with a regular and sustainable income when you no longer earn from your work.

4. “Guard thy treasures from loss”
Understand the risks you are exposing your money to. Do not be tempted by large returns. Rather consider prudent investments which seek an appropriate level of risk-adjusted returns. Do your homework and consult the wisdom of those experienced in handling money for profit.

5. “Make of thy dwelling a profitable investment”
Own your home and, if possible, earn a passive rental income by letting out a portion of the property.

6. “Insure a future income”
Plan and make provision for your family should you no longer be there to support them. The key is to leave your loved ones in the lifestyle they have now, should you be gone. It is also crucial to save for a financially secure retirement – too many people make the mistake of putting off saving for retirement and the less years you have to save the less compound interest can work in your favour.

7. “Increase thy ability to earn”
Invest in yourself through education and keeping your knowledge up to date and relevant. Lockdown has provided some of us with an opportunity to learn a new skill or hobby – make sure you do this regularly, so that you keep up with the changing world around you, and also derive purpose and meaning from your work.

Van Dyk concludes, “Learning these seven principles and living by them, will go a long way in helping South Africans out there build a strong financial foundation. As a financial planner my goal is to ensure that the clients I work with have a" richer and more fulfilled future.”

Quick Polls

QUESTION

The intention with lockdown was to delay or flatten the Covid-19 infection curve and give both the private and public healthcare sectors time to prepare for the inevitable onslaught. Did the strategy work?

ANSWER

No, the true numbers are not reflected. Almost a quarter of South Africans may already have been infected with Covid-19
It’s too soon to tell. We will likely get a second wave with stringent lockdown regulations in place again
Yes, South Africa bought enough time to make a significant difference. We saved lives and have passed our peak. The worst is over
fanews magazine
FAnews August 2020 Get the latest issue of FAnews

This month's headlines

Ethical behaviour - are you toeing the line?
Latest business interruption developments raise more questions than answers
Brokers remember: You are accountable...
A sustainable pension - How to manage living annuities in uncertain times
Claim stats… life can change in a heartbeat
Are South Africa’s income protection benefit providers ready for COVID-19?
Subscribe now