Getting your finances in order sooner rather than later, is of the utmost importance.  When it comes to financial planning, like with many things in life, prevention is better than cure! At Red Dot Now, your financial health and wellbeing is important to us. 

It is essential to understand why it is crucial to get your finances in order. Motivation is one of the critical keys to action.  

The “Why?”

  1. Keep your eyes on the Prize  – long term and short term goals help us to focus our lives and financial affairs in a particular direction.  It would be a bit crazy to bundle your family into a car and cry “We’re going on holiday!” without any planning: no bookings, no map, no luggage, no food, no savings… That spells “disaster” in any language! Sound financial planning will help you keep your focus in the right place.
  2. Helps you avoid the Credit Snare – unfortunately we have all done it – we have spent money we didn’t have… When your finances are in order, it guards you and helps you to not spend what you don’t have and to stay free from the debt quagmire.
  3. Prepare for Emergencies – financial planning will stand you in good stead when “life happens” and those unforeseen expenses come along.
  4. Retire Blissful – none of us know what the future holds. We can, however, with careful planning, make provision for a more comfortable retirement.
  5. Sleep Easy – planning and preparation helps us to sleep better at night. Following the whirlwind of financial chaos, being more in control and aware of your financial situation and future, will be the calm after the storm. 

The “How?”

  1. Be Committed

Financial planning is a commitment, like most things in life. Making a commitment to plan and sticking to the plan, will be half the battle won already.

2. Asses Your Situation

To know where you are going, you need to first know where you are.  You will have to sit down and do the hard work of gathering information. This will involve all the facts around your current financial situation:

  • Income
  • Expenses 
  • Debt
  • Investments
  • Assets
  • Insurance Policies and Pension Plans
  • Savings

3. Get the Big Picture

Once you have gathered the relevant information, you will draw up a comprehensive BUDGET.  ”Those who fail to plan, plan to fail!” This is also true in the world of personal financial planning! 

A comprehensive budget would include everything mentioned in point 3 and other elements like yearly and monthly financial goals, a savings plan, insurance (life and short term cover), pension, medical aid etc.

One governing principle of a budget is: keep it simple and realistic!

4. Reduce Debt

Debt is truly a snare and a hindrance to financial freedom and peace of mind.  Do your utmost to reduce and even get rid of your debt altogether (especially the “expensive” debt like short term loans and credit cards). 

5. Rainy Day Plan

Unfortunately South Africa is not known for its “saving culture” in the financial world. Very few of us have grown up to be proactive savers. Be the exception – start a savings plan and stick to it, no matter what. 

6. End Well

It is an imperative part of financial planning to have a last will and testament drawn up.  It does not have to be complicated or expensive.  For the sake of those left behind, this is a really important part of financial planning that is often overlooked.

In Closing

Last, but not least: let Red Dot Now help you with advice and support in the financial planning process and enjoy the benefits of financial freedom and peace of mind.

Red Dot Now provides accounting, payroll and tax compliance services using the best of breed online technology.

Should you want to discuss this or any of their services further, contact Ryan Coats on e-mail at ryan@reddotnow.com