Getting Your Act Together!
The minute you put the word “financial” in the title of an article, many people tend to ‘click’ away, assuming that the article is going to be expressed in high-fluted financial jargon and will be expressed in arcane mathematics that requires a degree to understand.
Because so many people run from any mention of finance, writers walk a fine line between simplifying and misrepresenting financial concepts. For example, explaining what stocks are, is not particularly easy and it does involve learning some math, ratios and other homework.
That said, there are many financial concepts that, judging by the piles of articles out there, are made out to be much harder than they really are.
There are entire books, blogs and articles dedicated to budgeting. Whether you call it a budget, a spending plan, a financial tracking plan or whatever, budgeting simply means being aware of where and how you are spending money. It’s really not that hard to do, and online banking, debit cards and software have made it easier than ever before.
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If you don’t trust the web, you can go the old school route and collect receipts for every transaction and then tally them up at month-end (or daily if you can). Your tally will tell you if more money is going out than is coming in. If more is going out, you need to cut costs somewhere.
If you do have extra money available at the end of the month, set some aside until you have three to six months in easily accessible funds. Once that is done, you can do all those fancy manoeuvres such as setting saving goals. Remember, providing you have a cushion and are spending less than you earn, you’re in pretty good shape in the short-term.
If you have only one source of income, you can definitely do your own tax returns. However, we advise you to contact a professional Financial Advisor for assistance, as there may be areas where you could submit a legitimate claim, you might otherwise have missed.
There are lots of articles and books about odd deductions and credits, but they often end up drifting towards tax benefits for business owners (who are likely paying someone else to do their taxes).
If you don’t feel like slogging through the paperwork with a pencil and calculator, there is tax software out that can help you reduce doing your own taxes. Some of the software will even prompt you to consider deductions you may not have been aware of. The software is updated annually, according to the changes in South African Tax Law. Check out SARS E-filing… It’s really user-friendly!
Estate Planning (a complicated word for getting your act together) is nowhere near as complicated as it sounds. If you have more debts than assets, Estate Planning is incredibly easy. It comes down to both a skillfully thought out Will and enough Life insurance to cover your debts and provide for those you may be leaving behind. Your lawyer simply comes in at the end ensure all documentation is legal, but in fact, Estate Planning itself is really all about you and your wishes.
A Will is the document that holds all your Estate Planning together. For most people, the best thing to do is to pick up a Will and work through it before meeting with a lawyer. To be clear, a Will shouldn’t be the end point of your Estate Planning, especially if you have children, but it does get the basics out of the way in order for your lawyer to focus on the specifics of your Estate. These include details such as: How you would you like your children to be raised while they are still minors? What age will there inheritance be paid out? etc. If you have a large number of assets then estate and death taxes are a serious worry and you will either need to put a Gifting Strategy or Trusts in place. You can then afford to have a specialist Financial Advisor take care of the rest.
The Bottom Line
The goal of this article is intended to put things into perspective. To emphasise the importance of getting your act together and to make sure your planning is on track.
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Getting Your Act Together is easier that it seems, make it happen!