THE FINANCIAL WELLNESS PYRAMID
Afinancial plan needs to be approached in stages and one has to build a solid financial foundation before moving on to the next. For example, it wouldn’t make sense to prioritise an investment portfolio when you have debts to pay off, or try to pay off your debts before you have drawn up a budget.
The Financial Wellness Pyramid starts with a Wealth Foundation, where you focus on getting your day-to-day finances in order. You move through to Wealth Accumulation once that is in place and, finally, to Wealth Distribution, which is how to pass on a financial legacy to the next generation.
By using this pyramid, the #MoneyMakeover advisers are able to assist the candidates through a sequential approach.
Frank Magwegwe, head of Momentum Personal Adviser Services at Momentum Retail, says: “What has been important for the candidates to understand is that decisions at one level have a great impact on other levels. For example, if a person does not have a realistic spending plan, it will be difficult to use credit wisely and not spend more than what he or she earns, which will have an impact on having money for other accumulation goals.”
Over the past few months, advisers have been focusing on the foundation level, as this establishes the strength and stability for a healthy financial plan. Without it, the entire financial pyramid could collapse. Now they have identified where the financial gaps exist in their candidates’ overall Financial Wellness Pyramid and which gaps need to be prioritised.