Planning Perspectives Your ultimate lockdown checklist – Part 2

Planning Perspectives

Your ultimate lockdown finance checklist – Part 2

Lesego Monareng

teaches you how to survive these covid times by budgeting and learning how to use money better

MANAGING your personal finances, as well as planning and investing for the future, are essential survival skills. Last month, I discussed the first two pointers on my checklist: drawing up a budget and managing your debt. In Part 2 (points 3 to 5) we look at investing offshore, building an emergency fund and estate planning.

3. LOOK BEYOND OUR BORDERS The spread of the virus is a good illustration of how small the world actually is. When it comes to managing your money, you need to adopt a global perspective.

Investing in South Africa is great, but will you get the same returns as an investment that is exposed to global markets? Likewise, are your investments spread across various sectors (such as medical, technology, resources, agriculture), asset classes (equity, property, bonds, and cash) and currencies? This is called diversification and it’s essential for long-term financial growth. But investing is not something you can easily learn on YouTube. Rather speak to a trusted Certified Financial Planner (CFP) who can assess your individual situation and make sure your investments are adequately diversified.

4. BUILD AN EMERGENCY FUND Every industry has been affected by Covid-19 and retrenchments are rife. Your job might be secure now, but that can change in an instant, which is why you should start an emergency fund immediately.

Here’s a scary statistic: most South Africans are only one pay-cheque away from poverty. Imagine losing your home, your car and all the other valuable possessions you’ve spent many salaries acquiring over the years?

The rule of thumb is that your emergency fund should equal at least three months’ income. It’s hard to save when money is tight – this is where your budget comes in. Weed out any unnecessary expenses and balance that with repaying debt and starting an emergency fund.

5. THINK ABOUT WHAT WILL HAPPEN WHEN YOU’RE GONE Before Covid-19, death was probably a distant thought at the back of your mind. But the virus has shone a spotlight on our mortality – many people have lost loved ones, or know of people who have.

Death is painful and traumatic on its own, but it’s even more difficult to deal with if your loved ones are left with all your financial problems. What happens to your assets and liabilities? How much will be required to maintain your family lifestyle? What will happen to your busin ess if you’re not around to run it? Will your family still have an income? If you’re unable to answer these questions, you have some work to do. Again, speak to a CFP professional who will assist you in drafting a will and putting safety nets in place to manage these risks.