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Financial Plan Checklist

You often receive messages encouraging to you get financially organised and to meet with a financial advisor etc. but what do you actually need?

While everyone’s circumstances are different, the list below is a quick Financial Plan Checklist to help you focus.

1. Understand your current financial situation.

Obvious, but if you do not have a clear idea of your starting position then everything you do will be a bit of a guess. This means doing a budget, so you know where your money is going and what you do and don’t have i.e., your assets and liabilities.

Then take care of the things that can have the biggest effect on you first. As mentioned above this will depend on your personal circumstances – are you single, married, divorced, do you have children how old are you etc.

2. Healthcare

Unfortunately, in South Africa the healthcare system determines that you probably want to have access to private healthcare in the event of an emergency. Even if you are young and healthy and think that you are bulletproof, unfortunate events and accidents could be just around the corner and you do not want these to end up having a major effect on your wellbeing. Get the peace of mind knowing you have access to suitable healthcare.


  • ensure that you understand the difference between medical aid and health insurance.
  • you get tax credits if you are a member of a medical aid (R12 816/year for a family of 4)
  • Use Gap Cover as a cost-effective way to enhance your medical aid cover.

3. Personal Insurance

Most people insure their assets, their cars, computers, jewellery but neglect their most important asset – yourself! If your car is in an accident it may cost a few thousand Rand to fix but what would the cost be if you were not able to earn an income. Again, we all believe that things will not happen to us, but our lives could change in an instant and a bit of planning can often be the difference of an event being a life adjustment or a disaster. This is probably even more relevant if you are married and/or have children.


  • Explore income protection options (especially if you are self-employed or a professional earning fees).
  • Critical illness cover – with the increase in claim rates, you are probably more likely to claim on this insurance in the future.
  • Disability insurance – with most insurance firms you have the option of a lump sum or a monthly payment; however, products are now available where you can benefit from both in one policy.
  • Understand the premium patterns for these policies as some options are low on inception but increase significantly later on.

4. Short-Term insurance

As most of us do not have the financial capacity to merely replace some of our assets short term insurance is important to protect against this eventuality. While most people focus on the lowest premium remember that with insurance you usually get what you pay for, so make sure you understand the implications of the options presented


  • No claims bonuses come with an additional cost.
  • Understand your excess obligations.
  • Consolidating different insurances on one policy is usually cheaper.
  • Review the insurances you are “forced” to take e.g. bank mortgages, cell phones

5. Retirement

Probably the biggest reason why only 6% of South Africans can retire financially is that they start saving too late in life. Saving is a habit and one which you never regret. The earlier you start the less you have to save each month and the more feasible your retirement plan becomes.


  • The earlier you start the more options you also have available.
  • You get tax deductions on your retirement savings so let SARS help you save!
  • People are living longer so historical assumptions are less relevant.
  • Review you plan regularly as your assumptions are constantly changing.

6. Estate Planning

No matter how old you are or what you do or do not have you should have a will. A little time getting this sorted will save the ones you leave behind a lot of time and stress at a time they need it the least.
Having taken time to sort out you will, make sure that it can be implemented or else the exercise is a bit of a waste of time i.e. is their sufficient cashflow available to cover the costs (there are always costs!).
While some people have a negative perception of life insurance it really is the best product around for solving financial problems. From being able to clear your debt to being able to provide an income for the people you leave behind it has a myriad of applications – and it is fairly inexpensive!


  • The younger you take out life insurance the cheaper it is. As you can often increase the amount later, lock in your access early (even if it just small amount)
  • Use life cover to get peace of mind regarding your children’s education.
  • Leave a cash bequest to a charity/Alumni etc. funded by a life policy.
  • Again, understand the premium patterns for these policies as some options are low on inception but increase significantly later on.

7. Savings

There are two types of savings that you should focus on:

Emergency Fund

Without a nest egg that can be easily accessed you run the risk of all your financial planning

quickly being derailed. Your emergency fund could also save you thousands of Rands by not only avoiding you having to access credit facilities but also giving you options in an emergency situation. With an emergency fund you set an amount, you save towards it and then hopefully you can stop and use these savings elsewhere.


  • The generally accepted amount is between 3 – 6 months’ salary.
  • Should be in a risk-free investment (earning interest)
  • The funds must be able to be accessed almost immediately.
Discretionary savings

This is usually represents “surplus” funds you have available after living and providing for your financial plan. Discretionary savings can include:

  • Saving for a particular event – a year end holiday, a new car, an investment property, to start your own business or even elective surgery.
  • Saving to leave a legacy – ensuring that your children/heirs will be financially better off.
  • Having peace of mind – the knowledge that you are financially secure.


  • If possible, have multiply investments, each with a specific purpose to ensure that risk exposure is appropriate to the purpose.
  • Set objectives for each investment to provide the necessary investment focus.

Closing thoughts

While you can do some of your financial planning yourself having an “independent” advisor who is trained to assist you is strongly advised. In any event, some of the products which will be included in your financial plan are only accessible through registered intermediaries. Financial advisors also have the necessary product knowledge so that you do not have to spend hours trying to understand them.

As a parting comment, in your financial planning always remember that often the biggest factor preventing people from being financially secure is debt. The true cost of debt is huge, consider the following example:

If you bought a house for R2.2 million over 20 years with a bond rate of 10.5% and a deposit of R80 000 you would pay a monthly instalment of R21 165.65 and a total of R5 079 757 -interest of R2 959 757 (you bought your house twice and then some more!).

If you increased your instalment by just R3 000 per month you would not only save R1 031 665 in interest but also pay your house off 6 years earlier. Imagine the difference of investing that saving in your financial plan instead of paying it to the bank!