(By Jo-Anne Bailey, Sales Director & Country Manager for Africa, Franklin Templeton Investments)
No matter how daunting or complicated it may appear to be, you have the power to take control of your finances to create lasting wealth and security
While it would be ideal to start building our retirement savings and investments the day we start working, the reality is often more complex. We all come from different contexts that influence our financial needs. For example, you may still be paying off student loans or have family members who need your financial support from the day you begin your first job.
For many, the expenses only continue and increase
Student loans get replaced by car payments or wedding expenses. We have children, buy bigger houses and use the money at our disposal to survive day to day. As we move through life, it is so easy to find reasons to spend reactively and not invest in ourselves. Ultimately, the investment you make in your financial future, no matter how small, is the most important investment of all.
Money, when invested and spent wisely, buys us opportunities, freedom and memorable experiences. Yet how do we get there? The best place to start is by building a clear financial picture.
Take a look at your needs and wants. Where would you like to be five, and then ten years from now and how will your finances impact this?
Where would you like to be five, and then ten years from now and how will your finances impact this?
For example, even if you have just started your career, it is important to understand whether you would like to own property, study further or start your own business one day. That way, you can make decisions now that have a positive impact on your future and build the infrastructure for you to realise your dreams.
Once you have set these financial goals, it is also important to invest in saving enough to allow you to be financially independent and prepare your retirement savings. While retirement hardly seems urgent when you’re only just setting out in life, investments thrive the longer they are in the market.
Therefore, the younger you are when you start saving, the more your money will grow. It is an uncomfortable reality that, as we live longer and longer, we may need far more retirement savings than we think we will.
Retirement is an especially important consideration for freelancers or contract workers that do not have an employer saving for them. It is not just a responsibility to yourself, but to your community and the government. If everybody takes care of themselves in old age, there will be far less pressure on the state as a whole.
If everybody takes care of themselves in old age, there will be far less pressure on the state as a whole.
While we should take investing and saving seriously, it does not have to all be solemn. Once you have a focus, you just need to fall into a routine of saving and investing in order to feel safe and provided for. Anything extra can be used to spoil yourself!
Ultimately, financial management is not as complicated as it seems
Many principles run through every aspect of managing your savings and investment, from living within your means to delaying gratification for greater long-term wealth. If you have a firm understanding of what you value and the life you want to live, this will drive your motivation to make different spending decisions.
Once you have a firm understanding of your own personal principles, you can choose an investment vehicle that fulfils your needs. At Franklin Templeton Investments, we classify different needs according to basic contingency funds, savings for short-term goals and savings for long-term goals.
With the right investment plan in place and a bit of commitment, you will not only feel secure, but achieve lasting wealth. Speak to your financial planner about solutions to investing in your future, that best fits your current standing.