Saturday, Jul 06, 2013

Everyone has aspirations in life. Some dream of great fortunes, lofty mansions and luxury cars, while others are content with the idea of retiring to a modest apartment and sending their children to college. No one can know for sure what the future holds, but without proper planning, it can be difficult to achieve life’s goals.

“We all think about the future, some of us more than others. No one has a crystal ball but by not having a sound financial plan leaves you at a greater disadvantage,” says Ilana Meyer, head of corporate solutions at Acuma Independent Financial Advice.

“It is not often that we think of the things that can go wrong. The what ifs - what if I become ill? Who will look after the children, the house? Not having something as important as critical illness and life cover only adds to what is already a bad situation,” Meyer adds.

By creating a financial plan, Meyer, says you can get on with enjoying life and, at the same time, have peace of mind knowing that you will be ready to deal with the important events in the future, such as providing for your children’s education. “We all want to give our children the best education we can, but with the increasing costs will you be able to pay the fees? Would you really want to have to tell them that they couldn’t go?”

“The cost of delay is one of the biggest risks to any financial independence and security. The older you are, the more you will have to save to reach your desired goals,” Meyer points out.

The following steps will help you plan your finances for the long term:

•Review the state of your finances

Knowing the real state of your finances is a crucial step in the planning process. It will help you make realistic goals. “[It] forces you to think about money. The more time you spend thinking about your money, the more focused you will be in building your wealth,” says Meyer. “By keeping track of your finances, you will know exactly how much money you actually need on a monthly basis, how you spend your money. Make your money work for you,” advises Meyer.

While you’re reviewing your finances, look at any existing policies you have in place to ensure they are suited to your needs. If you have life insurance, for example, find out if it still fits your needs. Check if your savings goals are on track.

•Define your goals

Financial planning is all about defining what it is you really want to achieve, what resources you will need to make it happen and how much time you will need to make it happen, Meyer says. One of the first steps to take then is to identify your long-term goals. Do you see yourself sending your children to college 18 years from now? Do you want to run your own business or live in a two-storey villa in Cyprus when you’re over 60?

“Long-term goals are exactly that, long term. The sooner you start planning for them, the more time you will have to achieve them,” says Meyer.

But it’s important that whatever you want to achieve, you start saving or investing for them early. “Someone who is 30 that has a goal of retiring at age 60 with an income has a far greater chance of achieving their goal than someone who is 50 wanting to retire at the same time with the same amount,” Meyer says.

•Review, revise, review

Your plans don’t have to be set in stone. It is important that you revisit your goals often. You can review them from time to time and make some revisions, if necessary. “Life is never straightforward and setbacks will happen. If something throws you off your target date, don’t give up - set a new one based on the situation at the time,” says Meyer.

•Look for a financial advisor

You can either do this before you come up with a plan or while you’re in the middle of it and feel like you need some expert hand to facilitate the process. Getting the help of an expert makes financial planning a whole lot easier.

“The financial planning process is a journey and working with the right people to achieve your goals is key,” says Meyer.

Choose an adviser that has a license and the necessary qualifications. “Ensure that you choose a company that works with your best interests in mind,” adds Meyer.

By Cleofe Maceda Senior Reporter

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