PLANNING POINTS
By Ryan McCaughey
The year 2021 has been a challenging and unusual year for us all. For many, it has placed significant stress on health, mental and financial well-being. As we enter the final month of the year, it’s usually a time where we take a moment to reflect on what we’ve learned, so that we can put our best foot forward for the year ahead.
While reflecting on the past year (more like the past two years), it’s important to focus on what you can control and not on what’s out of your hands, which is often a distraction from the important things in life. This is especially true when it comes to planning your financial affairs.
Given the unusual time we all find ourselves in, I’d like to challenge you to reflect on your financial affairs, asking questions like: “Do I have a financial plan?”, “Am I on track to long-term financial security?”, and “What can I change in 2022?” You’re essentially making your 2022 financial resolutions.
Importance of a financial plan
Having a detailed financial plan gives you a strategy to make practical financial decisions in all aspects of your life. The strategy is a step-by-step approach to meet your life goals, and acts as a guide as you go through your life’s journey.
A financial plan allows you to be in control of your income, expenses, and investments, such that you can manage your money to achieve your long-term financial security goals.
Long-term financial security
We live in a fast-paced world, and there’s a never-ending list of things we need to-do. These things take up all of our time. Even the thought of reviewing and setting new year financial goals can be daunting. It’s typically a ‘kick the can down the road’ thing on your to-do list. Or something that ‘I’ll deal with at a later stage’. Sound familiar?
In the months to follow, I’ll share a monthly article focusing on what I feel are pertinent components of a well-structured and sound financial plan.
Here are some important questions to help you through the process.
- Do you have a long-term financial plan in place, which is actively managed and reviewed at least annually? Have you appointed a dedicated, professionally qualified financial advisor?
- Is your investment portfolio optimally structured to meet your long-term needs, while taking diversification and costs into account? Is your investment portfolio optimally structured to avoid unnecessary taxes and costs?
- Does your financial plan incorporate estate planning and optimise costs, taxes, and administrative expenses?
- Has your life insurance been reviewed recently to ensure suitability and relevance?
- Have you got competitively priced and appropriately structured short-term cover in place?
- Do you have adequate cover for any medical emergency?
2022, here we come!
I have big plans for 2022, and I’m excited for the year that lies ahead. In the next few months, I’ll continue to offer my perspective so that we can all stay informed and empowered when managing our financial well-being.
I’d encourage you to contact your Certified Financial Planner (CFP) to ensure your financial plan is up to date and aligned with your objectives. More importantly, you need to understand each aspect/step of your financial plan. If you don’t have an adviser, visit www.fpi.co.za for a list of CFP professionals near you.
Ryan McCaughey, CFP, is a planner at Hewett Wealth and the Financial Planning Institute’s Financial Planner of the Year for 2021/22
PERSONAL FINANCE