Call in the experts on Financial Planning
Once you start earning money, you develop either good financial habits, bad financial habits or a combination of the two. The longer you keep up with the bad habits, the harder they are to break. So it is really important to try and learn good habits when it comes to your finances.
Work wisely with your money
Good habits include spending wisely, not living above your means, paying off debt as soon as possible and putting money away for your ‘old day’.
Wise folks always say you should put 10% of your salary away as savings, from day one. But so few of us actually do this.
Other advice dictates that you pay off your highest interest debt first, then the second highest, then the third highest and so forth.
Paying off your car is also a wise plan, followed by paying off your house. No debt is the best bet, but we know that this isn’t always possible. What is possible though, is to plan ahead.
Help is at hand
That’s where people such as brokers come in handy. A financial broker is a person trained in the ins and outs of investing and planning for the future when it comes to finances.
Financial planners take a look at your current financial state. They investigate your assets (the stuff you own that are worth something) and your liabilities (the stuff you owe money on).
They see what your living costs are today, and work out what your living costs are going to be when you retire one day. They can help with a budget that will tell you how much you have to spend each month, and how much you will need one day.
As with all professions, you get the ‘good guys’ and the ‘bad guys’.
The ‘bad guys’ usually work for a specific company and will try to sell you only products from that company, whether they are good or bad. The ‘good guys’ on the other hand are independent, and will advise you as to the best products out there – no matter who they belong to.
Always take note though, that even the independent brokers could be slightly biased towards specific companies’ products, as the commission on these products will be more than those of other companies’ ones. They unfortunately also need to make a living, so there is very rarely a 100% independent broker. There are however many of them that are true ‘good guys’.
So how do you pick a good broker?
Well, the best way is to ask around. Ask friends and family. Check with colleagues. Do your homework. Ask the broker who they work for, what associations they belong to, and how they make their money.
This is especially important. Some brokers charge you a fee to consult you, and others don’t. If they don’t – ask yourself why. Perhaps it is because they make their money from your products (they take a cut), instead of charging hourly rates to make up their salaries. I’d be weary of the ‘free consultations’. Make sure you know how he or she operates beforehand. Yes, you’re going to have to fork out some cash to see them, but at least you know you are getting a better deal, as they won’t be taking all their money from commission on your products.
So yes – getting a broker is one way of getting your financial planning in order. You are after all ‘playing around’ with your future, and you want to make sure you do the right thing.
What is the process?
Well, firstly your broker will want to know what you have and what you owe, how much you earn and how much you spend.
Brokers also ask one of the weirdest questions imaginable: “At what age do you think you are going to die?” This is so bizarre, but unfortunately necessary. Your dying age will have a lot to do with whether you are going to have enough money when you’ve retired, to last you until your last day.
Of course this isn’t an exact science, as no-one knows when they are going to die. It might be tomorrow, it might be when they turn 110. But making a good estimate can help the process along.
Brokers also have good advice on taking care of elderly parents, how to ensure your children will have enough to see them through school, and also setting up a last Will and Testament.
The latter is part of financial planning – should you no longer be around to take care of your dependants.
But whatever assistance you need from a broker, planning for your future (and current) needs is always a good idea.
Do your homework, speak to those in the know and make sure you get your finances in order. Planning is always key!