Category: Financial literacy

July 28, 2021 Blog, Financial Advisory, Financial literacy, Investments, Lifestyle, Retirement

To save or not to save

So often we meet clients who tell us that they cannot afford to save because ‘school fees are really expensive’ and ‘looking after family members is derailing their savings goal’….and the list of reasons is endless. If we are really honest, life has changed dramatically in the past year and a bit. Things are not as black and white as they have been, and we cannot continue living as if death and financial insecurity is not a part of our lives.

Many of us are experiencing anxiety and real fear about our immediate and long term wellbeing and we cannot brush that aside. If this is you, know that you’re not alone in all of this. And your fear and stress are justified.

While we are trying to keep our heads above water, we need to consider a few things. In the event that we make it through the next week or year or decade, what will our financial situation look like? In the event that we make it to retirement, will we be able to sustain ourselves on what we have saved over the years? Current statistics suggest that we won’t as only approximately 6% of retirees in our country are financially secure. The rest are either forced to continue working or are dependent on family or the state for their survival. While our mortality may be in question, our survival is also very likely and we must try our best to plan effectively for it, if it happens.

So what can we do today to try and better our situations, given the mess the world is in right now?

Here are a few pointers that may help:

  1. The first and really important step is to acknowledge your feelings. It’s ok to be feel the way you do. Be gentle with yourself because this is really a difficult time we’re in
  2. Be honest about your spending habits. Many people think they know how they spend but don’t really. When we work with clients, we almost always find money they had no idea they had, simply because they don’t really keep track of every cent they spend. If you do anything in the next few weeks regarding your finances, understand where your money goes – ALL of it. You’d be surprised at what you discover during that process
  3. TALK. Talk to your spouse, your children, your extended family members that you support – talk to them about money. Talk about what you have, what is possible and what is not. A lot of anxiety and financial strain can be alleviated through honest conversations. Try it

Once you’ve done all the above, you may discover that it is possible to start your savings/investment journey. Even if it’s with very little money. But the important thing is that you actually start. With time, and we see this often with clients, you gain momentum and are encouraged by the balance you build up which then gives you the desire and willpower to continue to accumulate more. Remember that there are two important ingredients of wealth accumulation and that is starting early and consistency. Both are in your control.

Be well.

March 1, 2021 Blog, Financial Advisory, Financial literacy, Investments

Financial advice in a crisis

The past year was dreadful, to say the least. What has made it even more difficult is that it was collective as the whole world suffered immensely in many ways in the past year. Amy Underwood, a Behavioural Economist, spoke at a recent webinar about trauma and how we, as humans deal with it. She mentioned that, generally, we tend to go through it at different times, allowing us to call on our network of friends and family for support and comfort. What made the events of 2020 even more difficult for all of us to contend with is that we were all experiencing the trauma simultaneously, which meant little to no external support was received.

With the loss of financial security for many, the importance of financial advisors’ work was in the spotlight. It has become clear for many that keeping good financial habits and having a good financial back-up plan is vital, particularly in times of turmoil.

The financial planning industry, in general, has come a long way from a product focus to behaviour management. Talking numbers and drafting a financial plan is only half of the solution and possibly the easiest part of the journey. The hardest part of financial advice is understanding clients’ emotions in all phases of their financial journey, and particularly in times of distress so that the right kind of advice and intervention can be provided to clients that will help them navigate their way through the peaks and troughs with perspective and confidence. That is why, from the initial meeting with clients, they get to understand that no matter how great the financial plan is, life happens and there will be the temptation to veer off course. Emotions must be understood and addressed to avoid making mistakes that will be regretted in the future.

his article was featured in the Financial Planning Institute of Southern Africa’s website. To read the rest of it, please follow this link – https://www.fpistaff.co.za/FPI/News/Financial_advice_in_a_crisis.aspx

September 30, 2020 Blog, Financial Advisory, Financial literacy, Lifestyle

Leave your children with lasting money lessons

I have two young children and often, as I presume many parents do, I find myself imagining them in their 20s, 30s and even 50s — how they’ll look, the kind of people they’ll be, what they’ll be up to, and so on.

One of the many things that keeps me awake at night is the lessons I need to impart to them that will have a positive impact on their lives. What can I teach them that they will remember for years to come?

Lessons about love, respect and honesty top that list. Every parent, I imagine, wants to raise upstanding adults with sound values and who’ll make a positive contribution to society. Invariably, however, we pass on many negatives, too.

There are many things we’ve learnt from our parents, good and bad, that we will pass on to our children unless we make a conscious decision to change their path. This heritage month, I’m thinking particularly about the financial lessons passed on from our parents. Many of us were never really spoken to about money, such as how to look after it, grow it through investing, and possibly leave some for the next generation. 

Two things I learnt from my mom, a single parent with two children, was how and how not to spend, two very different sides of the coin. I was often told that we simply didn’t have enough money for all the things I wanted, but we never really sat down and discussed our household budget and why there wasn’t enough money. It was always a one-liner: There is no money for that.

This article is published in Business Live. Please follow the link below to read the rest of the article.


https://www.businesslive.co.za/money/2020-09-29-gugu-sidaki-leave-your-children-with-lasting-money-lessons/

August 11, 2020 Blog, Financial Advisory, Financial literacy, Investments, Lifestyle, Retirement

Women, do something for yourself for a change

Women are known to think more of and do more for others than themselves, in the process sacrificing their careers, money and general wellbeing.

In this women’s month, think about this: There is a very high likelihood that you, as a woman, will have to parent alone, will not save enough money to cater for your needs and will ultimately die poor and alone.

Study upon study shows the odds are stacked against women.

According to an article published four years ago by the UN’s Food and Agriculture Organisation, women “reinvest” up to 90% of their earnings in their households – that’s money spent on food, health care, school and income-generating activities to help break the cycle of intergenerational poverty.

In a research paper titled “Women and Retirement Security”, Nevenka Vrdoljak and Anna Rappaport make these important findings for women to note: You live longer, accumulate less money over the years, are more likely to be a single parent, are likely to spend your final years alone, and are 80% more likely to be impoverished from age 65 and above.

This article is published in Business Live. Please follow the link below to read the rest of the article.

https://www.businesslive.co.za/bt/money/2020-08-09-gugu-sidaki-women-do-something-for-yourself-for-a-change/

July 6, 2020 Blog, Financial Advisory, Financial literacy, Lifestyle

Is it possible to save in difficult times?

July has been designated Savings Month by the South African Savings Institute. Going by current data, South African households don’t really save much. SA’s household savings ratio refers to the income saved by households during a certain period and is calculated and published by the South African Reserve Bank. At the end of 2019, our savings ratio was -0.20%. That means, as a country, we spent more money than we earned and didn’t save at all.

South Africans also use debt to cope with extreme financial pressures, which is reflected in the continued rise in credit card advances and the fact that we spent 72.8% of our gross income in 2019 to service debt, according to the central bank.

High levels of indebtedness can be directly linked to low levels of financial literacy. Financial literacy is your ability to make rational decisions when it comes to spending, saving, borrowing and investing.

This article is published in Business Live. Please follow the link below to read the rest of the article. https://www.businesslive.co.za/bt/money/2020-07-05-is-it-possible-to-save-in-difficult-times/

June 15, 2020 Blog, Financial Advisory, Financial literacy

Be cautious about where you seek financial advice

The lockdown has been a very interesting time for many financial advisers. Now that people have more time on their hands and are mostly in front of their computers, there seems to be a greater need to get their financial affairs in order. This is a very good thing.

Over the years, I have noticed how many interesting and sometimes dangerous conversations about money take place on many different platforms. A recent observation is that on social media, recommendations of a financial nature are often dished out by popular individuals who have no relevant experience, appropriate qualifications or authorisation – often to a gullible and potentially ignorant public.

The reality is, financial advisory work and the world of investments in general can be complex, is multi-faceted and requires a lot of customisation. Money, like health, affects every aspect of your life and should be treated with caution and respect both from an adviser and client perspective. Particularly now, with world economies in disarray and livelihoods at stake.

This article is published in Business Live. Please follow the link below to read the rest of the article. https://www.businesslive.co.za/bt/money/2020-06-14-be-cautious-about-where-you-seek-financial-advice/

April 20, 2020 Blog, Financial Advisory, Financial literacy, Lifestyle

It’s time to have those difficult conversations

We’re all reading more than usual. And, based on everyone’s social media posts, baking more than ever. I made bread and vetkoek for the first time and they turned out really well.

But while we’re all becoming more domesticated, we’re also having to confront some of our worst nightmares, brought by Covid-19 and the subsequent lockdown.

Many businesses have had to shut and many more will do so. With closures come the casualties – you and I, among others.

I think of all the goods and services that my family and I have had to forgo recently: dry-cleaning, shoe repairs, hair styling, car washing, swimming lessons for the children – the list is endless.

These services were the bread and butter of the people offering them, people who still need to feed their families and pay the bills. And even those who are still lucky enough to earn an income don’t have job security – a scary reality.

Money conversations are some of the most difficult to have under normal circumstances. What, then, when we’re facing what feels like Armageddon?

A 2018 Ameriprise study, “Couples and Money”, found that at least a third of surveyed couples in the US clashed about money at least once a month. It would be safe to assume similar, if not higher, numbers for couples in SA.

This article is published in Business Live. Please follow the link below to read the rest of the article.

https://www.businesslive.co.za/bt/money/2020-04-19-its-time-to-have–those-difficult—conversations/

February 24, 2020 Blog, Financial Advisory, Financial literacy, Lifestyle

Love languages and money

Gary Chapman wrote an international bestseller in 1992 titled The Five Love Languages: How to Express Heartfelt Commitment to Your Mate. He writes about the five ways to express and experience love between romantic partners which he calls “love languages.” They are gift giving, quality time, words of affirmation, acts of service and physical touch. Over the years, there have been a few variations of this book and the most interesting one I’ve found is the personal finance spin.  Tarra Jackson from The Patch wrote the following in her 2014 article:

Financial Love languages are identified by behaviors that represent individual financial value systems.  By understanding these behaviors, couples can improve communication and establish a collective financial value system. The four Financial Love Languages are Saving, Giving, Investing and Spending.

  • Saving is not only an action of financial security, but for some it is an act of fear or control.
  • Givers have a philanthropist heart.
  • The Investor takes relative risks and enjoys watching their money grow
  • Spending deals directly with the “Pleasure Principle.”

I recently came across a very interesting blog post in Mint life regarding love languages and how they affect your finances. The flow chart they created will help you discover your love language and they provide tips on how to use that to craft a better relationship with money. It may help you as well, as we wrap up the month of love.

Source: The Mint
January 13, 2020 Blog, Financial Advisory, Financial literacy, Investments, Lifestyle, Retirement

Investing in happiness

The beginning of a new year is a time for reflection, planning and new beginnings for many. Many personal finance writers have been giving extensive and very valuable tips regarding budgeting, saving and investing to kick-start the year. These are important lessons to learn and not having money is devastating on many levels. It is, however, equally important to note that money cannot give you all the happiness you require.

Jonathan Clements, an acclaimed personal finance columnist and author wrote an article in the Wall Street Journal titled ‘Nine Tips for Investing in Happiness’. This article was published in 2006 yet remains very relevant today. Interestingly, none of the tips he provides involve accumulating more money, budgeting or investing. These are the three that stand out the most:

Keep your commute as short as possible

According to this study, How commuting affects subjective wellbeing by B Clark, K Chatterjee, A Martin, A Davis, there is a negative correlation between a long commute and overall wellbeing. Not only that, the mode of transport used, and the conditions experienced during the journey exacerbate the issue. The study also found that those who walk or cycle to work were happier and more satisfied with their lives compared to those who used public transport to commute.

Using this metric alone in the South African context, it would be safe to assume that the bulk of the population are experiencing lower levels of subjective well-being, given how far they must commute in often very difficult conditions. [Spatial apartheid or the segregation of the population along racial lines is still a massive reality in post-apartheid South Africa].

Enjoy a good meal

According to StatSA’s Living Conditions Survey results released in April 2019, approximately half (49,2%) of the adult population surveyed recently were living below the upper-bound poverty line. That means almost half of the population is preoccupied with survival as opposed to enjoying the little pleasures of life that so many of us take for granted daily.

Volunteer

Life tends to get the better of us and we often believe we have far less money and stuff than we need. Oftentimes, that cannot be farther from the truth. Volunteering your time is one way to keep you grateful and makes you feel good, physically. A few studies have proven that giving helps to release endorphins giving you a mild high. This, in turn, reduces your stress levels.

Being able to reduce your daily commute, enjoy a luxurious meal occasionally and to give (whether it is of your time or possessions) means you already possess a few things that have been proven to contribute to overall well-being and happiness. When considering your investment portfolio and changes that need to be made it, consider adding ‘happiness’ as an asset class this year. Write down all the things that make your heart sing, that bring you joy, that make you HAPPY. Make it a daily practice to actively increase your allocation to these things at all times. Do this often, particularly during times of financial difficulty, and your preoccupation will become more about the things you have as opposed to those you don’t.

Happy new year!