Know where you stand – reduce the stress
Seven years on from the credit crunch and the economy still seems to be limping along. It’s the new normal. Jobs that were lost, are probably gone forever, unemployment is dire and the only real growth is coming from SME’s. Yes, there’s opportunity there, but in the meantime family and budgets alike are under pressure. Interest rates are starting to climb again after a long hiatus, and there is every indication that there are plenty more to come – so for anyone with debt that is bad news.
Enough of the misery. Much of the stress created by uncertain finances is fear of the unknown. There is an automatic assumption that if a job is lost, or there is another calamity, the world is going to fall apart, and you are going to be out on the street. Mostly that panic will pass, but it has a nasty habit of interrupting your beauty sleep.
So how can you keep this stress at bay? Here’s a start:
- Get organised. Have one file with all your important financial documents: Your financial plan and estate plan, Will, Policies, Investments, Medical aid plan details, Short term insurance policies. I call it the ‘Red File’. If you’d like a free 10 page template go here: http://kerenga.com/e-books-guides/. At least if you wake up in the middle of the night, you know exactly where to go to reassure yourself.
- Have an income statement: (let’s not call it a budget). Know what is coming in, and what is going out.
- Stress test your income statement: Find out what can be put on the backburner (investments say) and what has to be paid come hell or high water (bond, car, electricity). This will give you a good idea of how big your ‘safety net’ needs to be.
- Have a safety net. I can’t emphasise enough how important this is. Get your advisor to help you check that you aren’t overpaying on any of your insurance, and put those savings away. If you haven’t had much luck with saving, give this blog a read : Tricked you! Make savings a game : http://kerenga.com/savings_a_game/#more-886.
- Please take more risk with my money – said nobody, ever. It’s not cool to be clueless. At least know the potential up and downside of your investments and what a realistic return on investment is. Remember, if it sounds too good to be true… Your financial advisor will tell you if it is sound or not.
Need help? Give me a shout.
Author Dawn Ridler