Financial planning is a discipline which involves many aspects of managing your finances in the aim of increasing financial security and reaching your long term goals. It’s widely known that financial planning is important, but it’s also not uncommon for younger students and even professionals to ignore financial planning in the early stages of their life. Starting off a stable future through financial planning doesn’t need to be difficult, and the easiest way to start is through disciplined savings.
There are a lot of excuses floating around for why someone can’t save at the moment, how they’re planning to save later in life, or how they don’t need to worry about retirement because their company offers a retirement scheme. Personal savings don’t just ensure security for retirement. They can allow larger purchases in the future like a first home, a new vehicle, or even be used to finance a business venture later in life. The best way to get in to a position of financial security is to begin saving now!
Even for university students, savings are possible. Imagine that a student could save up to 1600ZAR per month. It’s not a lot, and even with modest living and a part time job it’s possible for many people. Now ignoring that later in life savings would likely be much higher, let’s calculate that 1600 per month over a 30 year period.
We end up with 1,781,071.82 Rand with a compounded interest rate of only 6.5%. Now, consider that after college and throughout employment, savings would likely increase by at least double. The quoted figure would be significantly more. So a student who started saving at 20, would in all likelihood have in excess of 3million by the time they turned 50. That’s with simple saving and no investment. With careful investments, that number could easily triple.
The benefit of savings is often ignored because the long term goal seems so far away. But if students were to talk to retirees who didn’t have a financial plan, they would soon find out that living without a financial strategy can lead to hardship and stress later in life.
Combining savings with a strict budget, investments, and careful debt management is all part of a sound financial plan that will see individuals and families in better financial situations throughout every stage of their lives.
Ultra Fin is a financial management consultancy located in South Africa that helps individuals, families, and business owners reach their financial goals and live in financial security. Savings are just one of the aspects of financial planning that we endorse.
No matter where you are with your current finances, or what you’re currently doing in life, a consultation with Ultra Fin can open you up to new ideas and an exciting future where your finances are an asset, rather than a concern.