By John Manyike, Head of Financial Education at Old Mutual
Why do people work? According to HRD Connect, a human resources insights portal, 72% of us work to live, while 50% say they work to support their families and pay their mortgages. What’s missing, says Old Mutual, is responses that list building financial futures, happy retirements and leaving legacies as work goals.
Let’s face it, work is more than just something we must do. Our work helps shape who we are and assists with building specialised knowledge and future opportunities. Ultimately, work is about knowing that a steady income helps us buy homes, raise children, enjoy our leisure time and contribute to the betterment of our societies.
Work can and should be more. With the proper focus and financial education, work can be the tool that leads you to make good financial decisions about money and the road to building positive futures. Instead of looking at work as a daily duty, it should be grabbed as an opportunity to take small steps and build great things.
The place to begin is using the first two building bricks of personal financial planning. The first brick is having a budget; the second is making sure you pay yourself first. Master these two rules of personal financial planning, and you are on the way to a sound financial future and leaving a proud legacy.
You can save and invest money for the future by deducting money regularly from your earnings before you pay your bills. To do this, you can:
- Build short, medium and long-term savings to meet daily and emergency needs
- Move from just saving money to building an investment plan that helps your money grow by taking advantage of more advanced financial products
- Contribute to a well-deserved retirement through a retirement annuity (RA)
- Plan financial strategies to meet your needs as your life changes and you move from being single, married, buying assets, having children, paying for education and then retirement
- Plan a legacy for the time when you pass so that your family is secure.
Of course, while building a positive future, you should also be backing your efforts with a valid will.
When planning a legacy, your action plan should be to:
- Start the process now. Life is uncertain, and putting things off could be at the expense of a positive future
- Include your spouse in discussions so that you are both working towards a common goal
- Get professional help to find practical ways of ensuring your legacy.
When it comes to building a legacy, there is no doubt that life insurance is one of the strongest tools available. The most immediate benefit is that when you pass, all your accounts are frozen and cannot be used. A life policy, because it is paid directly to beneficiaries, provides immediate cash.
As life insurance pay-outs to beneficiaries are not part of the estate, they can help maintain your family’s lifestyle after your passing. The money can also meet everyday costs and pay educational bills to help your children build futures that could eventually benefit your grandchildren.
Legacy planning gives meaning to what you have created during your working life. It is about leaving behind not only assets and cash but also the knowledge that you had a dream for your family’s future and worked hard to help guarantee that they could lead their lives to the full- even if you could not be part of it.