Planning – The Key to Wealth

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A report by UBS Wealth Management in Switzerland had a very interesting article on the wealth of people who are Good Planners versus Bad Planners. It shows that if you don’t have a budget, investment plan and retirement plan, you are guaranteeing that you will limit your wealth over your lifetime.

1. A simple budget will make an enormous difference
   Many people get to the end of the month wondering where their money went. If they have this experience on a regular basis over their working life, they usually get to retirement age wondering why they have no savings. If you find yourself in this position on a monthly basis, it is almost certain that you don’t have a budget. A good budget should be very simple and more importantly, very realistic. Many people start budgeting by deciding what they SHOULD spend, rather than what they currently spend. For example, if you currently spend R5 000 per month on food, restaurants and entertainment, there is little point in budgeting an amount of R2 000 from next month. Rather start by reducing these budgeted costs by R500 per month and see if you can stick to it. Use this principle to progressively reduce your variable expenses over time. At the same time, try to save at least 10% of your gross income every month. And remember, if you can’t afford 10% immediately, start with something small and increase your savings over time.
2. You need to plan your savings too
   The UBS research revealed that those who don’t plan place a limit on the wealth they can generate over their lifetime. According to the report, Simple-Planners were able to accumulate almost double the wealth of Non-Planners. The research revealed that if you decide to do no planning, you have a good chance of being poor and you have almost no chance of being wealthy.
3. Plans don’t need to be complicated
   Once you have a budget and stick to it, you will get to the point where you can begin your investment planning. As a financial adviser, I assist you by drawing up an investment plan based on your personal goals and needs. Your Savings Plan will include an emergency cash fund, planning for your children’s education, retirement savings, and other wealth creation goals.

In summary, the research tells you that you need to take control of your money, don’t let it control you. A small amount of forethought will enable you to increase your prospects for wealth substantially over your lifetime.