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Financial Planning

Make sure your financial plan is pandemic-proof

By: Old Mutual

It’s August, the month we celebrate women and focus on our unique challenges and roles. This year those challenges have been compounded by the chaos caused by Covid, highlighting the need for a solid pandemic-proof financial plan, says Monica Moodley, Legal Manager at Old Mutual Personal Finance.

“Proper financial planning is key to managing an uncertain future. With women outliving men and generally landing the role of being the primary caretaker of the family, financial planning for women has taken on a new urgent tone.”

A will is vital

According to the recent Old Mutual Savings and Investment Monitor (OMSIM) Covid Special Report, 39% of working metropolitan South Africans earning between R20 000 and R80 000 per month indicated that they are part of the Sandwich Generation, which means they financially support their immediate families as well as their parents and/or grandparents.

Estate planning and drawing up a proper will are essential to ensure that if anything happens to you, your loved ones will be financially taken care of and your assets will be distributed according to your wishes. 

It is vital to seek help from a professional financial adviser who can assist with drafting a will that is tax-efficient and meets your family’s specific needs. 

Keep protection intact

The OMSIM report also found that 46% of South Africans earning between R20 000 and R80 000 a month said their income was negatively impacted during lockdown.

With many people’s incomes negatively affected and retrenchments on the rise, it is important to try and preserve benefits such as life and disability cover, medical cover and retirement savings (usually part of your employment package).

If you are retrenched, a financial adviser can help to find a way of preserving your benefits. The adviser will analyse your circumstances and make sure you have sufficient capital for life and disability cover and other insurance that will help protect your family from setbacks.

Invest for growth

Working circumstances have drastically changed over the last few months. Many women are working from home and juggling family responsibilities, including home-schooling the kids. 

Because most of the activities are centred around the home, the advantage is that there may be extra funds available to invest. Consider investing the money you  previously had to spend on transport expenses, petrol, entertainment costs and travel. This surplus has the potential to generate returns and create wealth if invested wisely.

“Consider striking while the iron is hot! Speak to your financial adviser about taking  advantage of low share prices and low property prices. As Christopher H Browne says, ‘Buy stocks as you would groceries: when they are on sale.’ However, you need to think about this very carefully and know the risks before you invest in equity. It  offers the possibility of capital growth, but there are no guarantees,” says Moodley. 

Save for emergencies and big goals

The Covid-19 pandemic has brought into sharp focus what is important and ‘essential’. If you have reviewed your budget and found areas to cut back, it is important to channel this into an emergency fund and a fund for your longer term goals, like providing for your child’s tertiary education costs and saving for retirement.

Crises offer new opportunities and the more you expand and update your skills, and the more multifaceted you are, the better you will be at innovating and adapting when difficult times require it. 

As Moodley says, “It is always important to hope for the best, yet plan for the worst. Planning is important, particularly during times like these.”

“As women, we try to take care of our families’ physical, mental, emotional and financial needs. Ensuring a solid financial foundation for yourself through a proper financial plan that is updated as your circumstances evolve will ensure your families’ financial future is secure.

“Now is the ideal time to consult a financial adviser who can help you update your financial plan or put a fresh one in place. Seek advice from an accredited financial adviser who can assist you with a tailor-made financial plan to cater for all your needs.”

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