You must have a financial plan
During tough economic times, we are often tempted to question the need for having life and short-term insurance and why we should save for our retirement. With so many competing demands for our precious cash resources, why should we spend our money on something that cannot be felt or touched, or enjoyed right away?
A well-constructed financial plan is one of the most important gifts you can give to yourself and your loved ones. The best way to develop such a plan is to consult with an expert in that field. Together you would analyse various facets of your financial situation including retirement planning, risk management, investment management, tax management and estate planning, taking your available cash flow requirements into consideration.
Like any of your precious belongings, your financial plan needs to be cared for and maintained. It is essential to review your plan on a regular basis, because your circumstances keep changing, and your plan should take into account those changing needs. Cancelling an insurance policy or investment plan is seldom a responsible thing to do, unless a change is required in terms of your overall financial plan. You should always be mindful that financial planning involves paying yourself first, and only then spend what remains of your income on necessities and luxuries.
It is not known who wrote the following few paragraphs, but the author quite beautifully sums up what a life or short-term insurance policy does for you, written from the point of view of the policy or investment plan itself.
I AM YOUR POLICY! You and I each have a purpose in this world which, when broken down, is remarkably similar. It is your job to provide food, clothing, shelter, schooling and medicine for your loved ones. You do this while I lie packed away. I must have faith and trust in you. Out of your earnings will come the cost of my upkeep. At times, I may appear to be somewhat worthless to you – but some day (and who knows when) you and I will change places. When you are laid to rest, I will come alive and do your job.
I will provide the food, clothing, shelter, schooling, medicine and other things your family will continue to need – just as you are doing now. When your work is done, mine will begin. Through me your hands will carry on. Should you live to reach the golden years of retirement, I will come to life and help provide the necessary money to keep doing your work.
Whenever you feel the price you are paying for my upkeep is a burden, remember that I will do more for you and your family than you can ever do for me. If you do your part, I guarantee I’ll do mine.
Before you are tempted to make any changes to your financial plan, or if you do not have a financial plan, it would be wise to consult with a Certified Financial Planner®. It may save you from making some life-changing mistakes!
•Rands and Sense is a monthly column, written by Ross Marriner, a Certified Financial Planner® with PSG Wealth. His Financial Planning Office number is 046 622 2891