The importance of a Personal Annual Financial Plan

It’s a brand-new year and let me begin by wishing you all a prosperous 2023! We usually overlook planning for our financial well-being from the beginning of the year. A Personal Annual Financial plan helps you map out what you hope to achieve in a year. It is a compass that guides you through navigating from where you are right now financially to your future goals. It helps you clearly plan for your short, medium and long-term financial goals. Whilst the basis of an annual financial plan is the same, the plan will differ due to various factors as follows:?

1. Review of the previous year

The starting point is a brutal and honest analysis of how you faired financially in the previous year. Look at the goals you achieved or failed to achieve. Then, review, re-evaluate and re-apply the strategies where necessary in the new annual financial plan.?

1. ?Life events

Life events, such as marriage, divorce, new births, children at various academic stages, death, alterations in income streams, approaching retirement age, and a major illness or injury dictate the strategies to employ to achieve financial goals. The goals may include saving for a new family home or children’s education. Also, reviewing your insurance cover is vital at this stage to meet your current needs in your life stage.

1. Retirement and Investing

Most young people think that retirement planning is for older folks only. Retirement planning should start immediately when you become gainfully employed to take advantage of compound interest. Your wealth bonus will be quite substantial at retirement.?

1. Debt

Scrutinise your debt and come up with ways to reduce it. Then, try paying off those you can immediately.

1. Additional income streams

Think of other means to create additional income streams to increase your income even through to your retirement years.

1. Saving for emergencies and investments

It is important to include this component in your annual financial plan. Life is so unpredictable that an emergency usually comes when we least expect it. So start putting some money in an emergency fund to help you during those unforeseen events.?

In conclusion, creating this annual financial plan might look daunting, but it is a worthwhile exercise. It will give you a clear direction to reach your sound financial destination. More importantly, involving an independent financial expert can make this exercise easier. Reach out to your financial adviser or get one in the event that you don’t have anyone, to assist you structure an annual financial plan that is tailor-made for you and your circumstances.

Adelaide Matare

BEd. (UZ); PDG Mgt (RBS); MBA (RBS)

Sanlam Accredited Financial Planner (Affluent Markets)

Email:?[email protected] ; Cell: 0812158476 Oranjemund?