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Friday, 02 September 2016 00:00

7 Components of an Effective Financial Machine

A financial plan is the "engine" that drives your fortune and this machine is made up of various parts. A financial plan has a management component for income, expenses, debt reduction and savings and considers your short and long term goals while taking various risk factors into account.

Having a powerful engine will depend on factors that will affect the rate of performance and earnings you require to reach your goal, this defines your plan.

A good financial engine will have the following engine components:

  1. A Cash Flow Management Plan to determine budget v. goal affordability and if needed, a debt elimination plan.
  2. An Asset Management Plan to strategise on wealth creation.
  3. A good Retirement Plan that takes economic changes and other factors into consideration that will affect your income at retirement.It is important to start planning your retirement early and revisit your plan regularly to ensure that your current Retirement Plan is on track and if it will be sufficient when that time comes.
  4. A Risk Cover Plan is about covering, protecting your lifestyle, income and assets and loved ones.
  5. Estate Late Plan is your last will and testament and your last wishes.
  6. A Tax Plan takes into consideration tax on interest earnings and aims to increase your wealth creation.
  7. f you are a business owner you should also have a Business Succession Plan to ensure the continuity of the business success and growth when it is eventually transferred to the next generation or sold to a third party.

The above 7 components combined form a good financial engine. A Financial Planner might only specialise in the wealth creation component and therefore it is important to be aware of other features of the financial engine that completes it.

Also remember no engine can function optimally without being serviced regularly, likewise, the financial engine requires an overhaul once in a while. At the very least, an annual review with your Financial Planner will keep your financial engine running smoothly and you will remain well informed and positioned on any significant changes in your personal finances and economy. Your financial engine is your money flow strategy, your financial plan for today while building your prosperity for tomorrow.

Written by Natasja du Preez
WARNING AND DISCLOSURE: The blog content is for general information purposes only and does not refer to specific advice to any particular person’s individual financial objectives or financial needs. Before making any financial decisions contact Ben Charlton or your Financial Planner.Although every effort has been made to verify the accuracy of the information contained in this material, we disclaim all liability, for any error, inaccuracy in, or omission from the information contained in this material or any loss or damage suffered by any person directly or indirectly through relying on this information alone and not speaking to a qualified Financial Planner.

Ben Charlton

A financial planner can be someone who sees you as a number; they sell you the product that works best for them, they do exactly what you ask for, no more and no less. We are not like that, to us, our job is not to sell you a product, it’s to help you realise your dreams.



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