Director of Precept Wealth Solutions, Mandy Stratfold
Managing your money well and being financially independent means being in a position where money constraints no longer get in the way of achieving your ideal life. To help you get started, try putting this plan into action:
Step 1 Keep one month’s salary in a money market account that you can draw from at short notice. This will cover job-loss shortfalls, emergency car repairs or a big medical bill.
Step 2 You can’t manage your funds without knowing your real cost of living. Prepare a monthly budget of what your average monthly costs are and then determine if you’re living within your means. Preferably, your monthly income should exceed your monthly costs, but if you find yourself in a position of debt, be aware of the different “costs” of debt. Find out what interest rate you’re being charged, what the repayment term is and what early settle-ment options there are. Try and eliminate this debt as quickly as possible.
Step 3 If you need to submit a tax return, make sure that this is done timeously to avoid paying penalties and interest on late payments.
Step 4 Ensure you have a will detailing how your assets should be distributed and, if you have children, who is nominated as your children’s guardian. Make sure you have sufficient life cover to clear any debts that you may have, as well as disability cover in the event that you’re unable to work.
Step 5 With an emergency fund saved, your debt under control and life cover provided for, you need to save towards your retirement. Choose a long-term investment fund. How much should you be savingt The simple answer: as much as you can afford.
Full article can be found at http://www.shapemag.co.za/lifestyle/give-your-life-an-audit/