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624 407 Maysure Financial Services

Reviewing Your Financial Health

It has never been more important to set goals to secure your financial health than for the upcoming year. If we can take supplements and exercise to safeguard our physical health, and work with others to improve our mental health, how can we look out for our financial health?

The best way to do that is by actively reviewing your current financial status. If your goal is to achieve healthy finances, there are a few key ideas that we recommend as a starting point. This post will explore the ins and outs of financial health and share some important tips on how to improve yours!

What Is Financial Health?

Businesswoman writing on wall

Before we can begin to review your financial health, we must first understand what financial health means. Some describe it as individuals having sufficient cash flow for what they need and want, now and in the future.

This means knowing your current financial status, and whether or not it’s been meeting your wants and needs. So, take the time to examine your cash flow and ask yourself: does this satisfy my wants and needs?

Why Is Financial Health Important?

Young plant rising from the ground

This leads onto our second key idea, understanding why financial health is important. Much like the importance of planning your retirement, it gives an individual the opportunity to structure their finances to cater to their current and future circumstances.

This is especially important in today’s environment where every day can present a host of unknown variables. It’s essential to educate yourself about your finances, and to revisit this annually to adjust it to match your changing attitudes and goals.

Contact us if you’d like some help with your financial planning. We have a proven track record in helping our clients turn around their financial health.

Our client *Imraan had unstructured finances before he began his journey towards financial health. Since he has begun working with us at Maysure Financial Services, he says he is reaping the benefits of “better investment decisions, improved yields, a positive lifestyle adjustment, and financial happiness”. The right financial advisor will help you achieve these benefits and shape your wealth so that it works for you.

How Can We Achieve Financial Health?

Now, you might be wondering where to start. Luckily, we have provided four steps to help you effect successful and productive financial changes.

1. Determine your net worth

This is as simple as minusing your total liabilities from your total assets. To begin, you will need to calculate your total assets. This is anything you currently own, such as your house, your car, or other investments. Liabilities are any debt that you owe to a third party such as loans, shopping accounts, or credit card debt.

Here is a useful application to help you calculate your net worth. For those that like a working example, here’s one for you: 

Let’s say you own a car worth R160 000 and a house worth R1 200 000, this would bring your total assets to R1 360 000. For calculating liabilities, let’s say you owe around R500 000 on your house, and you have an outstanding debt worth R25 000, this puts your total liabilities at R525 000.

A formula would look like this: total assets – total liabilities = net worth. Your net worth could be negative or positive. Either way, this means you have an idea of where your finances sit and can start to evaluate your financial health.

Calculator and pen and document

2. Calculate your debt to income ratio

Now, let’s look more closely at your monthly financial status, which is your debt-to-income ratio. In basic terms, this means how much you owe each month versus how much you earn each month.

For example, if you pay R10 000 on your house bond and R2 000 on your shopping account, and earn R24 000 then your ratio for each month would be 1:2. This makes it around 50 percent. You want your ratio to be much lower, i.e. you want your ratio to be at around 20 percent, which means your debt takes much less than half of your income.

Happy, neutral, and sad faces on paper

3. Work with financial goals

Once you understand more about your financial status, you can start to set some goals about where you want it to be. This means being realistic about your monthly budgets, and ensuring that you’re not spending more than you earn. The goal here is to be able to have a steady cash flow so you can afford all your needs and wants, meaning you gain good financial health.

Effective budgeting ensures your financial resources are sufficiently distributed to cover your wants and needs. At this point, it is also very useful to seek out the assistance of your financial adviser. We can help you to work on an investment plan. Both of these in tandem will help to keep track of your spending while growing your wealth.

Saving is not as simple as just putting money away for a rainy day. It’s crucial you choose your investment accounts thoughtfully. Consider having multiple investment accounts that cater to various needs, for example, tax-free investment isn’t intended for emergency funds, but is useful for long-term investment.

4. Take a moment and enjoy your financial health

It’s easy to get bogged down with trying to save money and allocate your wealth responsibly. But, remember that it’s just as vital to enjoy your wealth by budgeting for those getaways and personal spoils. It’s possible to enjoy your finances once you have a realistic idea of your net worth, your income-to-debt ratio, and long-term goals.

This doesn’t mean allocating half of your monthly earnings to lifestyle expenses, after all, lifestyle inflation can become costly in the long run. But, rather allow yourself calculated luxuries that will still help you maintain your financial health status.

Man in bathing costume jumping into lake

Final Thoughts on Financial Health

Financial health is an important aspect of living that you can learn to make work for you. By reviewing your financial health, you can get more realistic about where you are and as a result, start to plan for where you want to be. Now and in the future. We are here to help you tackle ‘the how’ of financial health and make your money work for you.

Please do not hesitate to get in touch to find out how to make your money work for you:

+27 11 839 2302

info@maysure.za.com

624 407 Maysure Financial Services

5 Ways to Spend Your Bonus Wisely

It’s been a long hard year, but the end is in sight. You’ve almost survived the year 2020 and what’s more, you have also been rewarded for your valuable contributions throughout the year – your bonus is in the post.

I’m sure the temptation to splurge a little is strong, especially as the silly season draws near. Let’s be honest – there is no better motivation to keep on reaching new heights than by reaping the rewards of your labours. However, there are a few mental checkpoints you should go through first to ensure that you are being financially astute when rewarding yourself:

1. Clear Your Debt

One solution when facing financial challenges is to get cash flow by taking out a loan. In order to do this, you would need a good credit history, which is made up over the years by you showing a track record of… you guessed it, paying off your debt!

If you did take out a loan during lockdown, you’re not alone in that boat. It can serve as a life jacket to keep your head above water. But, as soon as you receive a cash injection in the form of a bonus, the wise choice is to pay off that debt and get rid of the interest overhead. This is especially true if you have charged to a credit card, where interest is notoriously high.

We asked Zaheer Talia, financial advisor at Maysure Financial Services, what his clients have done with bonuses in the past. He recommended:

“If a bonus is received, previously it was used to settle any outstanding debt – specifically credit card debt. Then, it is used to fund anything that was not budgeted for or expected but is priority, such as the house or car etc. Anything left over would be invested in unit trusts or similar.”

According to *Kenny, one of Maysure’s clients This results in favourable outcomes like the lessening of debt and the growing of investments. Maintenance on the car and house also ensures that these assets do not deteriorate to a huge extent in the future, preventing greater expenses at a later stage.

2. Take Advantage of Your Tax Deductibles

As you can see on page 6 of the Treasuries Tax Guide, there exist certain contributions as per Regulation 28 that are tax-deductible. Examples of these are pension fund contributions, medical aid contributions, and donations to name a few. What this means for you is that up to 27.5% of your gross annual salary can be deducted prior to your tax calculation taking effect.

So, if you were to crunch the numbers and allocate some of your bonus towards ensuring your pension fund contributions maximise that 27.5%, you could easily find yourself dropping down a tax bracket.

Needless to say, the savings involved in such an exercise can be quite eye-catching indeed. As well as serving the purpose of safeguarding your retirement. Exactly the kind of thinking that leads us to our next point…

3. Invest in Your Future

The uncertainty of the current global landscape serves as a timely reminder that life can have its ups and downs. An essential part of your financial planning should be to cater for those periods of decline by ensuring you invest in your future.

Two great examples of doing so are setting up a Tax-free savings account and making sure your emergency fund is well-stocked.

4. Invest in Your Present

With the current theme of working from home coupled with a less intensive social calendar for the foreseeable future, there is no time like the present to start upskilling. This could be something as simple as updating your budget or as exciting as starting that course to help you climb the corporate ladder.

Whether it be embarking on a new entrepreneurial endeavour or finally starting the MBA you’ve been dreaming of for years, it will most likely involve a capital injection. Luckily for you, a timely windfall has just arrived to give you the opportunity to be the best you that you can be. Speaking of which…

5. Spoil Yourself

All work and no play makes Jack a dull boy. Life is about experiences and we each have that something special that is close to our hearts.

Recharge your spirit by tapping into your passion. Spoil your family. Plan for your next holiday (air ticket prices should be good if you can get them in advance). Whatever it is, know that you can afford it because you’ve followed steps 1 to 4 and have been a savvy investor in your own life.

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Attention: Medical Aid Members

Your Increases for 2021

Discovery

To our valued regular readers and clients, please note that Discovery will be freezing monthly contributions to its medical aid plans for the first half of 2021 – after which it will introduce a price increase – capped at CPI +2%.

Profmed

Turnberry

Please do not hesitate to get in touch for further information or to make arrangements:

+27 11 839 2302

info@maysure.za.com

*Kenny is a fictitious name used to protect the identity of our client.