Money Heroes
Money Heroes is an empowering series that gives you expert advice from our Momentum Dream Team to help you on your road to financial well-being. This season starts by discussing the importance of life insurance and its significance for you.
How to make planning a part of your financial journey
In this episode, Leonie O’Connell, an adviser at Momentum Financial Planning, says the most important thing you can do on your savings journey is pay yourself first.
Also, if you’re thinking about buying a house, Theo Vorster, CEO of Galileo Capital, explains the savings considerations you should plan for.
Watch Leonie O’Connell point out the most important thing you can do on your savings journey in the video below:
Always pay yourself first
The reality is most people aren’t disciplined savers. For this reason, Leonie O’Connell, an adviser at Momentum Financial Planning, says you must prioritise paying yourself first.
A simple way to do this is by making saving a part of your monthly budget. Better yet, set up a debit order that goes off with the rest of your regular payments.
Fortunately, there are a number of ways to secure your financial well-being, thanks to several savings options available, whether it’s for the short, medium or long term.
Short-term goals
Your short-term savings goals should include building an emergency fund or savings nest that’s worth at least three to six months of your salary in a normal savings account. This money should be easily accessible in case of unexpected expenses.
A unit trust is a good option as it allows you to withdraw funds within 48 to 72 hours. This type of savings vehicle can be also used for saving towards a family holiday or buying items you might need for your home.
Medium-term goals
When it comes to medium-term goals, you’re looking to save over a period of five to 10 years. As an example, you could use an endowment fund to save for your children’s education.
“You have many asset allocations available in medium-term vehicles and your growth will be much better than short-term savings accounts,” explains O’Connell.
Long-term goals
An important long-term goal is saving for your retirement with a retirement annuity (RA). The funds saved in an RA are not available in the short or medium term and can only be accessed once you retire, from the age of 55.
This type of investment is great for putting money away that can’t be accessed immediately and is also protected from creditors, making it a safe investment for your future.
Determining how much to save can be challenging, but your financial adviser can help you with this. They can assess your financial needs, analyse them, and advise you on the most suitable options for short-, medium- and long-term goals.
“A financial adviser is there to support you on your financial journey, help you set goals and review your portfolio on an annual basis – or more frequently, if necessary,” says O’Connell.
Your financial adviser can guide you, answer your questions and help you plan your financial future, providing you and your family with security and peace of mind.
Watch Theo Vorster explain the savings considerations you should plan for in the video below:
Identifying your goals
No matter what goals you have, it’s important to plan for them. Buying a house, for instance, is one of the biggest investments most people will make in their lifetime.
But how do you make sure the house you buy is a house you can afford? According to Theo Vorster, CEO of Galileo Capital, your first step is to carefully consider all the associated costs.
Transfer costs
There are several big costs involved with buying a house, such as bond registration and transfer costs.
Vorster says you should be sure you’re going to live in the property for at least five or more years. Otherwise, the transfer costs might be a major expense that is not worth your while in the long term.
Calculate affordability
When calculating your affordability, factor in all the additional expenses that come with home ownership.
Apart from unavoidable costs like transfer duties, you will also need to consider building and contents insurance, maintenance, and regular expenses such as rates and taxes.
Don’t ignore the interest rate
A common mistake people make is overlooking the impact of interest rates when financing a house. Interest rates fluctuate, so be sure you can still afford your bond payments if interest rates go up.
“Don’t calculate your affordability on lower interest rates, calculate it on higher interest rates,” Vorster says.
Vorster advises working hard to save a substantial deposit before buying property to reduce the amount you need to borrow from a bank. Any additional funds, like a salary increase, should be used to pay off your bond as quickly as possible.
Making extra payments can turn your home loan and property into one of the best investments you’ll ever make.
Speak to a financial adviser and put #AdviceForSuccess into action.
Financial success is as unique as a fingerprint. That’s the beauty of defining your own aspirations and ambitions. With two tough years of living through the pandemic and an increasing cost of living, it will take great introspection to be honest about where we find ourselves and seek help when we need it, especially from an expert.
The right advice can propel you forward.
Ready to begin your journey?
Financial success is as unique as a fingerprint. That’s the beauty of defining your own aspirations and ambitions. Getting to where you dream of takes grit, determination and most importantly, honesty.
With two tough years of living through the pandemic and an increasing cost of living, it will take great introspection to be honest about where we find ourselves and seek help when we need it, especially from an expert.
The right advice can propel you forward. Our financial advisers have a vested interest in you: what do you value? What are your goals? This deep discovery sets the foundation for a relationship that will bear fruits of success.
Ready to begin your journey?
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