Winter is drawing to a close and I can see blossoms on the peach trees outside my window. August represents change, new life and it is also flower season in the Northern Cape. We are planning to visit later this month and look in awe at the sea of colours in an otherwise dry and arid region of South Africa.
My husband proposed a road trip, spending a night or two at different stopovers en route to our destination. We will be exploring small towns we have never been to and driving roads I have never been on. I do not like the unknown, so the trip is a bit of an uncomfortable undertaking. I wanted to structure the holiday to allow me to share in the excitement for the journey ahead. A roadmap providing a clear indication of the places we’ll be staying over, the dirt roads leading to those places along with the time it takes to reach them, is essential in providing me with peace of mind and a sense of control over our journey. It will also make me aware of any possible distractions and challenges that we might face, so we can plan to either avoid or mitigate those challenges.
All of us have dreams and goals, but few make the effort to reach those goals by writing them down and consciously planning to achieve them. Once you have a clear idea of what you want to achieve, you can create a realistic road map in reaching that destination.
Achieving financial independence is the ultimate financial goal – being self-sufficient and not relying on a salary or anyone else to help you enjoy the lifestyle you wish to live. The road map to financial independence is your financial plan.
Several key factors should be considered in creating your financial plan road map:
The destination:
Where do you want to be in ten years’ time or when you want to retire and with how much? Know what you want from your future. Be as specific as you wish and set a timeline within which to achieve this. Revisit this often – our goals change over time and we need to make changes to our plan to achieve those new goals.
A starting point:
Take time to understand your own unique financial position. Take into consideration your available cash flow, capital and your financial constraints. When setting goals, be realistic and honest with yourself: make sure those goals and the measures you take to reach those goals are practical and attainable. Consider your starting point in relation to your destination and the distance between them. This too will need to be revisited on a regular basis and may change from time to time.
Follow through on your priorities:
We need to make some sacrifices in the short term to attain financial independence in the long run. This may include time, lifestyle and money. The sooner your financial plan is in place and your financial journey kicks off, the quicker your high priority goals will be achieved, allowing you the opportunity to start focusing on the secondary objectives. Prioritising and planning can often be the difference between postponing and cancelling.
Managing challenges and obstacles:
Some obstacles might be small, causing a temporary deviation from your plan, whereas other challenges might be of a more serious or permanent nature forcing you to make permanent alterations in order to still reach your goals. Sometimes the goals may even need to change. Expecting a bump-free journey is not realistic but having a plan in place will allow you to recover quicker from detours, mitigate risks along the way or you may even be able to avoid them altogether.
Monitoring your plan:
Heraclitus, a Greek philosopher, is quoted as saying “change is the only constant in life.” Your financial plan contains many moving parts: whether it is your current financial position, your planned destination, or the journey along the way, change is inevitable. These changes might also relate to financial products or government legislation, which may serve as either a challenge or boost in terms of reaching your goals. Monitoring this will allow you to respond accordingly and timeously by making the adjustments required to either use these changes or to get you back on track.
Patience:
Having a financial plan is usually a long-term exercise and sticking to it can be frustrating and may even seem boring. During your journey, you will experience many economic and business cycles as well as unexpected events known as black swans, which might result in deviations from the plan or a loss of momentum. It is important to stick to your plan and not allowing these elements to intimidate you.
A financial adviser can help you assess and reach your goals by helping you get a plan in place, selecting appropriate products to address and reach your goals, monitoring your progress and by making the necessary adjustments to the plan as and when required. They can also help you make sense of and help you look through all the noise, serving as your GPS system in your journey to financial independence.
The journey to financial independence can be a long one with many twists, turns, the odd pothole and sacrifices required along the way. Having your GPS and roadmap by your side can make the journey both exciting and liberating, allowing you to live your best life on your own terms.
Author: Tanya Joubert, Wealth Adviser at PSG Wealth, Pretoria East
Affiliates of the PSG Konsult Group, a licensed controlling company, are authorised financial services providers. Visit www.psg.co.za for more information.
