According to Busa, 2012 will bring relatively positive economic recovery to SA, but considerable growth is still needed in the business and economic sectors. With medium-term economic recovery in the works, planning your personal finances is more important than ever.
If your financial know-how is lacking, consulting a financial planner is advisable. Almo Lubowski, a certified financial planner and Technical Manager at the Financial Planning Institute, shares tips for planning your personal finances to ensure a prosperous new year.
The importance of financial planning
"Financial planning provides direction and meaning to your financial decisions," says Lubowski. "It allows you to understand how each financial decision you make affects other areas of your finances. For example, buying a particular investment product might help you pay off your mortgage faster, or it might delay your retirement significantly. By viewing each financial decision as part of a whole, you can consider its short and long-term effects on your life goals. You can also adapt more easily to life changes and feel more secure that your goals are on track."
Financial planning is a shared responsibility between you and your financial planner.
Defining your goals
The key to charting your personal course to financial growth is to determine your financial goals. Lubowski offers the following tips:
- To determine your financial goals, you need to determinining your current financial point, looking at where you are now. The best way to do this is to create a personal financial statement evaluating and identifying all your assets and liabilities.
- It’s vital to also distinguish between a short-term (in the next five years) and long-term goals (beyond five years). Short-term goals are the ones you’ll focus on the most.
- It’s good to have one or two short-term goals that you’re focusing on at one time to eventually lead to a long-term goal.
- Focus is highly imperative and key to achieving long-term goals.
- You also need to bear in mind that your financial goals may change depending on your life stage.
Consulting a financial planner
Once you've decided to take charge of your future finances, it's time to consult a financial planner/adviser. According to Lubowski, your financial planner will:
- Help define your personal and financial goals and time frame to achieving them.
- Assess your current situation and establish what needs to be done to meet your goals.
- Offer financial recommendations and alternatives based on your feedback.
- Agree on a plan of action and implement financial recommendations.
- Monitor your progress towards your financial goals, if required.