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By: Kathleen Storey

October is financial planning month, and what a great time to get your financial resources organised. As we near the end of the year, it is time to start considering how to responsibly use year-end bonuses, prepare for the new year, and assess whether or not we have achieved our financial goals for the year. “What financial goals?”, you may ask.

Financial freedom is a term used to describe a situation where an individual has the correct amount of financial resources to suit his or her lifestyle. Financial freedom should be something we all strive towards, but how will we achieve it? There are a number of components that go into being financially free:

1. Budget: everyone of us should have a clear plan for how we earn and spend our money. Budgeting is the key to financial freedom, as this is the tool we use to assess how much money we have available, and then decide how best to utilise it. Oh, you see, financial freedom does not mean being a millionaire and splurging on luxuries; financial freedom is being able to live well, within your means.

2. Savings and investments: everyone should have a clear plan for their money, but this should not lead you to end off every month with your bank account on a zero balance. Financial freedom requires you to have covered your expenses, and still have some money left over to use for savings and, or investments. Savings and investments are another tool for gaining financial freedom, as savings offer a buffer against unexpected expenses and investments are a way to put your money to work.

3. Retirement: the average South African works from ages 18 to 65, so that is an average of 47 years of working for a living. Following retirement, you may still live another 20 or even 30 years, thanks to advancements in modern medicine. Let’s say you live to the grand old age of 85. You will need to live off your retirement fund for 20 years … almost half as long as you earned an income. Also consider that although expenses like raising children and travelling to work and back are less applicable to pensioners, there are a plethora of new expenses associated with old age. Young, working individuals should be setting money aside every month so that they can retire comfortability, and still spoil the grandkids.

4. Life insurance: as an income earner, you contribute towards the financial status of your family. As already mentioned, you may bring money into your household for over 40 years, allowing yourself and your family to live well. But what if you can’t work for the full 40 years? What will happen if that income is no longer brought into the household? Having financial freedom means knowing that you, and those that depend on you, will still have a secure future, even if your earning ability is jeopardised through severe illness, disability, or even death.

So, back to these financial goals of your’s. Take time this financial planning month to consider where you would like to see yourself, financially, in the future. Start by setting up a budget, identifying all your sources of income and distinguishing necessary expenses from frivolous expenses. Be sure to include some form of retirement and life insurance under necessary expenses. Then set yourself a savings target, or find an investment opportunity you would like to put any additional money into. Let 2019 be the year you start your journey towards financial freedom.


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Morebo Wealth (Pty) Ltd, an affiliate of Liberty, the Liberty Group Ltd is an authorised Financial Services Provider in terms of the FAIS Act (no. 2409)
Morebo Brokerage (Pty) Ltd is an Authorised Financial Services Provider in terms of the FAIS Act (no. 48360)

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