Your financial health ‘diary’

Errol Meyer

By looking at your life in stages from youth through to retirement you can plan ahead and also target financial achievements.

Starting out and getting established (ages 18 to early 30s):

This is the time to begin thinking as far ahead as retirement. Concentrate on developing lifetime habits like:

Paying yourself first. Decide what you want to save and put this aside before spending anything.

Learning not to compromise. Committing money to investments that stop you from drawing it takes away temptation. A 12-month fixed investment is ideal.

Putting together a budget. Deduct your compulsory savings, then set aside money for living and short-term goals.

Starting a long-term fund. Investment portfolios aligned to lifestyle goals, like education and buying a house, are good ways to go.

Wisely investing some of your budget. For example, cars don’t hold their value. Buy a pre-owned car or downsize and you’ll have money available when you need it.

Beginning to accumulate assets (mid-30s to 50)

With your education complete and career path decided, you’re now focusing on family and other responsibilities, like home loans, saving for your children’s future and other needs.

Typically, this is when you get established and your income increases accordingly. You should be looking at:

Increasing your contributions to medium and long-term savings mechanisms and taking out life insurance.

Diversifying savings and moving into shares, unit trusts and other products.

Reassessing your retirement savings and adjusting them if necessary. Ensuring you have a will. Review your investment plans regularly and get a professional financial planner to assess what you need for the next stage of your life.

As you approach 50, it pays to plan for health contingencies.

Independent family and the road to retirement (age 50-65)

Ironically, life gets cheaper and earnings greater now. Children leave home and your earning power peaks. Retirement beckons. Consider:

Ensuring you have no debt as you approach retirement.

Consolidating your investments so they’re low-risk and offer steady, inflation-linked returns.

Adjusting your retirement strategy and thinking about increasing your contributions to a retirement annuity.

Planning your estate and taking steps to ensure that your family – rather than the tax man – benefits when you die.

Being financially secure and ensuring the money you need is available through your life becomes more complex as you get older.

Three principles apply

First, the sooner you begin planning, the more you and your family will benefit.

Second, the task should be tackled with assistance from a qualified, professional financial planner.

Third, the best time to consider financial planning is when you begin working. You have time on your side, so your financial commitment will be smaller and your benefits larger.

Errol Meyer is from Standard Bank Financial Consulting