Mindoro – Survival Guide to achieving financial success
MANAGE YOUR FINANCES
- Determine your assets ~ assets can be simply defined as what you own. They typically include your home, car, cash in the bank and your retirement and investment accounts.
- Determine your liabilities ~ liabilities is your debt or simply “what you owe”. These are the opposite of assets and can include credit cards, clothing accounts, mortgage bonds and personal loans.
- Determine your net worth ~ your net worth is your total assets minus your total liabilities. This is the figure that represents your financial strength and is a good indication of your current financial situation.
- Determine your income ~ once you know your net worth, identify your sources of income and all your expenses. Income is fairly simple to calculate by adding all sources of revenue. For most people, this will be their salary. Other sources can be rental income and investment income.
- Determine your expenses~ to find relief in a financial crisis you need to know where and how you spend your money. The best way to determine this is to look at two month’s bank statements. Draw up a budget to list all your expenses into utilities, food, housing, clothing and entertainment and make the necessary lifestyle adjustments to reduce wasteful spending wherever possible.
- Be brave and face the consequences ~ be realistic about your life goals and calculate the costs of achieving those goals. Any expense that you are willing to cut back on qualifies for “managing your finances”, for example replace take out dinners with home cooked meals.
If you are in a financial crisis, you should take immediate steps to adjust, rectify and prepare for the future. Be sure to stick to the budget and save any extra money to build up a slush fund. An ideal amount to save should be enough to cover at least six months expenses. Having this money set aside will give you a financial buffer if you ever find yourself in another crisis.
Mindoro Group offers services that extend beyond your Employer Retirement Fund and Medical Benefits. Our financial planning services include comprehensive counselling with personalised solutions to assist our clients navigating towards good health and wealth.
It is important to partner with a personal financial advisor who is able to effectively analyse your financial circumstances and provide personalised solutions. We believe a long-term strategy will ultimately turn income into wealth and investments into legacies.
South Africans have become accustomed to living with debt, many over indebted and barely surviving in this ‘not-normal’ world. Overnight we face job losses and pay cuts putting our household income under severe pressure. Your only option is to go back to begin and reassess your finances. (refer Manage your finances)
Seek professional advice to help protect your assets and your income. A good financial plan will help you plan and be better prepared with income protection insurance and even create that slush fund for a rainy day. Make sure that you keep up with your debt repayments by paying the minimum amount required to maintain a good credit record and adjust the budget to include a savings element. As you pay off debt, celebrate by increasing the savings portion to slowly build up your slush fund.
If there’s no flexibility in your budget for impulse purchases, you’re setting yourself up for failure. Due to extreme emotions you need to be careful of overspending in this time. Emotions aren’t bad, and you don’t need to fear them for the sake of your budget. But stay on a good financial track no matter how you’re feeling and accept that sometimes, your emotions may get the better of you but Retail therapy is not the answer, try to avoid it! Gaining control over your finances is a lifelong process, and you’re allowed to stumble along the way, so keep going back the beginning and regain control of your finances.
Review your current financial portfolio and circumstances regularly, not just your savings account but your debt repayments and your insurance portfolio to.
- Life Cover ~ do you have sufficient cover in place to protect your family and loved ones? If you are the sole breadwinner in your family, then life insurance is a priority, because it replaces your income when you die. This is especially important for parents with young children or spouses who may not be able to sustain their standard of living when losing a partner.
- Disability Cover ~ your ability to earn an income is your greatest asset. What if you lost that ability? Disability insurance provides a source of income if you are unable to work due to an accident or an illness. With the correct disability insurance cover in place, breadwinners and dependants will have peace of mind that their income and assets are adequately protected.
Make sure to review your household and car insurance too!
Objectives are the framework to a good financial plan. Objectives help you monitor progress, measure success and make corrections when necessary. If you set yourself an objective, you will know what you need to do to accomplish it. You can measure your results and identify barriers to achieving those goals and objectives. We are living in a “new normal” world and you may need to adjust your objectives and reset your goals to ultimately achieve your dreams, personally and professionally.
- What do I need to accomplish?
- Why am I doing this?
- How well must I do it?
- How am I doing so far?
Knowledge is power, invest time and energy into yourself, you deserve it! Make an effort to learn more about your personal objectives and how you can achieve them, so you can enjoy financial freedom.