Transcript Tough timesx [Repaired]

Signposting
How to tighten your belt
in tough times
Danie Rademeyer CFP®
Adv. PG Dip Fin Plan
NHD Elec Eng.
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Is it tough times?
Major forces in our environment
• SA “swimming against the tide” of a global turnaround. Interestingly, SA’s corporate debt has
actually been declining in recent years.
• Low oil and thus fuel price helping the SA economy but the free falling rand is diluting that
effect.
• Our commodity export prices are falling due to increased supply and reduced demand,
especially from China. Expect oil to remain low during 2016.
• Difficult to quantify the damage to be inflicted on the economy by rolling blackouts. Some
observers have suggested a full percentage point loss of GDP growth due to power shortages.
We have entered the Eskom maintenance period until mid 2016.
• Severe drought affecting maize-producing areas and has a devastating effect on food security
and prices. The weak rand will compound the effect on USD imports to supplement maize
shortage
•The election year will impact decision turn around times as no one wants to make waves at this
stage. Voters are king again!!
World Bank Global growth GDP forecasts
Real Gross Domestic Product (GDP) – actual and forecasts for selected countries/regions
2014
2015
2016
WORLD
3.4
3.1
2.9
- Developed
1.6
1.9
2.1
- Developing
4.8
4.1
4.8
US
2.4
2.4
2.7
Euro area
0.9
1.5
1.7
UK
2.9
2.4
2.4
Japan
-0.1
0.6
1.3
Brazil
0.1
-3.2
-2.5
Russia
0.6
-4.0
-0.7
India
7.1
7.6
7.8
China
7.3
6.8
6.7
S Africa
1.5
1.4
1.4
Source: World Bank Global Economics Prospects ( Jan 2016)
Global Equity Market Performance YTD
The Rand +The Fragile Five+Russian Rouble
SA Retail Sales Growth vs Prime Rate (%)
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Tightening your belt
…and new year resolutions
I really must try and
quit smoking ...
I must try and lose a
little more weight ...
I must try and stay
within the speed limit ...
Starting 2016, do you
get the feeling you
might not be in as much
control of your finances
as you would like to
be? ...
a spending plan motivates you to ...
•
•
•
•
•
gain control of your own finances
get out of / stay out of debt
create a nest egg for unforeseen expenses
resist the urge to spend impulsively
achieve goals that you have set for yourself
and your family
creating a spending plan ...
monthly income
net salary (after tax / deductions)
R
allowances
R
other income
R
total income R ______________
List your monthly expenses to Breath
groceries
R
house rent / bond repayment
R
R
hp debt
installment sale or hire
purchase debt
R
R
repayment of credit card debt
R
Rates, taxes
repayment
of W+L
loans
R
life assurance / disability cover
R
short-term insurance (car / household)
R
transport (petrol, bus, train)
R
Medical
R
Clothes
R
List your monthly expenses to Live
DSTV
R
Household Furnishings
R
Garden & cleaning staff
R
Dining out
R
Leisure
R
Holiday
R
Charitable Donations
R
Internet / Data
R
total expenses
R
how do you get the balance right between
what you earn and what you spend?
these percentages should change
as you grow older …
housing
• rent
• bond
• utilities
• rates
• insurance
• maintenance
expenses
• food
• clothing
• education
• entertainment
• childcare
• medical
savings
car
• specific goals
• payments
- holidays
• insurance
- college
• petrol
- university
• maintenance
• retirement
• licensing
• parking
debt
• credit cards
• accounts
• loans
the action plan ...
• draw up your spending plan (budget)!
• commit to the plan and get your loved ones to
buy in to your plan!
• if you feel stuck, unsure or not able to find ways
to save … speak to me or your financial advisor
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Financial Independence: Whose Responsibility?
“The reality is: Your boss’ job is NOT to make you financially independent.
Your boss’ job is to cut you a pay cheque each month.
It is YOUR job to become financially independent.”
A Financial Independent Retiree
Two Perspectives on Wealth …
“Rich”
vs
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Financially Sound
• Have access to money
• Have access to sufficient assets after
retirement
• Live high
•
Maintain a sustainable standard of
living
• Big income, reflected in lifestyle
•
Relatively unassuming lifestyle,
irrespective of income
• See it, touch it
•
Sensible portfolio of (often invisible)
assets
• Wealth concentrated and exposed to
a career, profession or business
•
Wealth protected against
disappearance
LIVING WELL!
vs
SLEEPING WELL!
Advice on the Road to Financial Independence
1.
Aggressively focus your energy and resources
2.
Fill your wealth preservation tank for retirement
3.
Aggressively eliminate personal debt
- Finance life-style improvements with assets, not debt
4.
Be the master of your own lifestyle
- Resist peer pressure – have the guts to say: “No, thank you”
- Don’t consume more house than you need
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Advice on the Road to Financial Independence
5.
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Pay yourself first
- It’s not what comes IN that matters; it’s what goes OUT
- Beware of Parkinson’s Law: Expenses always rise to meet income
- Never withdraw from your wealth preservation tank before retirement.
6.
Keep your cool if and when you inherit money
7.
Gear for the right reasons
- Borrow to build your business, not to compete with the neighbours
- Put your money where your energy and focus is
things will be better
when the kids are
grown up ...
things will be better
when I get a job that
pays more ...
a dream without action
remains just a dream ...
a dream with action
becomes reality ...
do it today ... we can help
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Thank you