Wealth Coach Nelisiwe Masango on Building Future Wealth

Budgeting is by far the biggest threat to wealth planning. If you're part of the majority of people who don't have a monthly budget or who have one, but don't adjust it regularly, you could be hindering your financial progress.
Wealth Coach Nelisiwe Masango on Building Future Wealth
Image credit: Nelisiwe Masango

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Player: Nelisiwe Masango
Position: Founder and Director, Bear Run Investments
Visit: bearruninvestments.co.za/wp/

Q. What are some of the most common mistakes people make as they embark on their wealth planning journey?

As a financial wellness coach, I’ve picked up a few common mistakes that people make, irrespective of their age, gender or race:

  • Only 30% of people keep a record of their day-to-day spending, including receipts that aid in your monthly budgeting regime. Keeping a record of all your expenses, fixed and variable, will help you avoid overspending and being in a deficit at the end of the month.
  • Almost 60% of people don’t have enough money left over at the end of the month. This becomes an issue because you need to have an emergency fund that can be accessed within 48 hours, as well as capital to invest for long-term purposes, such as settling your debt, buying a new house, retirement and your children’s education.
  • 90% of people under the age of 35 do not have a retirement or pension plan in place. The biggest mistake that young people make is the assumption that ‘tomorrow will see to itself’. 
  • It’s of paramount importance to set money aside for retirement, whether you’re an employee or an entrepreneur.

Q. Why are so few people able to retire at retirement age in South Africa?

We’re living in a very materialistic era and for many, its more socially acceptable to drive the latest German car than it is to own a house. Society is falling victim to instant gratification. A negative attitude towards your financial future plays a significant role in how you view retirement. Having a stable pension plan, for some people, isn’t as exciting as dressing to the nines. 

Therefore, we need to create a culture that perceives financial security and sustainability as a goal, especially with the youth.

Statistics show that more pensioners are becoming poorer, resulting in some elderly people having to work throughout their 60s and 70s in order to get by. Time is an essential commodity. The sooner you start saving and investing for your retirement, the easier it will be to make better financial decisions — such as buying a house instead of renting, saving a bigger deposit instead of getting a car on residual. As a result, your life will become more comfortable.

Q. What is the most important thing to remember when planning for your retirement?

Retirement planning shouldn’t be complicated or overwhelming. Well-established companies generally deduct a portion from your salary and put it into a retirement annuity. This shouldn’t stop you from independently developing a pension plan with your financial advisor. 

If your employer does not offer a retirement annuity deduction then it’s your sole responsibility to contact reputable asset managers and financial institutions in order to get the retirement plan ball rolling. Once you have a retirement or pension plan in place, it’s important to check its performance regularly and make changes where necessary.

Q. What happens if you’re in your 30s, 40s or even 50s or 60s and haven’t started saving for retirement?

It’s never too early or too late to start taking charge of your financial situation. The biggest thing you need to consider is your risk profile. As we get older we tend to become slightly risk averse due to the number of dependents and responsibilities that we have.

It’s therefore advisable to get a risk assessment conducted prior to making any financial decisions and adjustments. Once you know the type of investor you are then it will be easier to select products that perform according to your expectations and comfort. 

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