By TKay Nthebe
“Our goals can only be reached through a vehicle of a plan, in which we must fervently believe, and upon which we must vigorously act. There is no other route to success” – Pablo Picasso
As we celebrate Lesotho’s 55th independence, I am excited about the financial planning week (4 to 8 October 2021), an opportunity for Basotho to work on their financial plans. It takes good planning to achieve anything in life; be it our health, fitness, or financial goals. I want to discuss the pillars of a financial plan, which can help Basotho identify and meeting their financial goals.
- Financial management
Managing our finances starts with setting financial goals and managing your spending habits.
- Do a financial heath check to determine your financial health status.
- Have a spending plan, monitor it regularly and make changes where necessary.
- Take care and reduce your debt to manageable levels and start building up savings for rainy days.
- Investment planning
A good financial plan requires that you have a clear investment strategy that will help you grow and make your money work for you.
- Set investment goals and develop an investment strategy that suits your financial needs i.e., capital appreciation.
- Choose assets classes that will help build and grow your investment portfolio.
- Diversify your portfolio, do not put all your eggs in one basket and remember it takes time to build wealth.
As discussed in previous articles, planning for retirement is your responsibility. The sooner you start saving the better.
- Determine how much capital you want to retire on and start saving for retirement. Saving for retirement requires that you start early to benefit from compounding interest. People are also living longer, so you need to make sure that you have enough capital to last you longer.
- Educate yourself on how annuities work and plan for living expenses such as medical expenses post retirement.
- Remember there are tax benefits when saving towards retirement.
Non-compliance is very expensive, so make sure you take care of your tax affairs and comply. There are also tax benefits available that can reduce the amount of tax you need to pay.
- Ensure you are registered as a taxpayer and submit your tax returns annually (from 1 April to 30 June)
- Take advantage of the allowable deductions e.g., contributing towards a comply retirement fund.
- Make sure you do not owe any taxes.
The mistake many people make when managing their finances is leaving their estate planning till it’s very late.
- Make sure you prepare and register a Will. Protect your children by nominating them as beneficiaries of your estate.
- Nominate and update your beneficiaries (including your children) if you are contributing towards a retirement fund.
It takes good planning to achieve financial prosperity and build generational wealth. This financial planning week, I encourage you to work with a qualified financial planner to develop your financial plan and work towards building LERUO. Likhomo!
