Integrated financial plan

Research is clear that those who have a financial plan in place are more likely to invest for retirement, pay their bills on time, and live a financially more comfortable lifestyle. A well-constructed financial plan should address all aspects of your portfolio with a view to creating an integrated strategy for financial success. In this article, we delve deeper into the components of an integrated financial plan and how they can benefit you.


Goalsetting is the first component of a successful financial plan as your goals will form the foundation upon which your financial plan is built. Recognising that life is not necessarily linear and that goals change over time, it’s important to create a financial plan that is designed to help you achieve your goals, but which is sufficiently pliable to adapt to your changing circumstances. When setting your goals, it helps to be as specific as possible and to attach monetary values and time frames to each goal. Not only will this help in calculating and developing appropriate solutions but will help you measure your progress when reviewing your plan. While it’s always a good idea to separate your short, medium, and long-term goals, it’s just as important to rank them in terms of priority as this will give you guidance in terms of which goals to start attacking first.

Taking stock of your balance sheet

Understanding your net worth is an important next step when developing your financial plan. Make a list of all your assets including bank accounts, investments, property, business shares, vehicles, and other immoveable property, and then subtract your debt, including your home loan, credit and retail debt, and student and personal loans. Be sure to record the applicable repayment terms and interest rates attached to each debt as this information will benefit you when structuring an appropriate debt repayment plan. If your wealth creation journey is in the early stages, it’s perfectly normal to have high levels of debt, such as a bond and/or student loan – and leveraging this debt and paying it off strategically is an important part of your wealth creation journey.

Tracking your cashflow

Formulating a budget and developing a system to track your expenditure is key to ensuring that there’s sufficient room for saving and investing. While regular expenses should be relatively easy to deal with, spend time understanding how your irregular expenditure fits into your budget. These expenses could include vehicle repairs not covered by insurance, out-of-pocket medical expenses, or unforeseen vet bills. Keep in mind that your budget will need to be sufficiently robust to absorb eventualities such as petrol price increases, interest rate hikes, and energy price increases. Careful scenario planning is an effective way of stress-testing your budget to ensure that it is resilient enough to withstand life’s curveballs. Finding room in your budget to save may require some ruthless number-crunching and serious contemplation around what falls within the definition of ‘must-have’.

Managing your debt

A well-constructed financial plan should help you use good debt strategically to increase your net worth. Remember, not all debt is bad – good debt, such as a home loan, can be leveraged to build equity in your property so be sure to take a tactical approach when incorporating debt into your integrated financial plan. If you have high-interest debt such as credit card or retail accounts, prioritise settling this debt as quickly as possible without compromising other aspects of your portfolio, such as keeping your medical aid and insurance premiums up to date. Keep in mind that the way in which you manage your credit facilities has a huge bearing on your credit score, so be intentional about being financially responsible.

Creating a cash cushion

One of the most important functions of an emergency fund is to prevent you from having to access debt to pay for high-cost, unforeseeable expenses. Short-term debt such as credit card debt is expensive and will result in you paying back significantly more than you borrowed to pay for the emergency which, in turn, will only set you back financially. Commit yourself to building an adequate emergency fund that is appropriate for your particular set of circumstances. When determining an appropriate level of emergency funding, consider your job security, whether you have an alternate source of income, and the living costs you would need to provide for in the event of retrenchment. There is no exact answer when it comes to how much you should keep in an emergency fund, but a useful guideline is to set enough aside to allow you to sleep peacefully at night.

Protecting your risk

Mitigating against the risk of death, disability, and/or severe illness is a responsibility all of us face, and it’s important to put adequate cover in place depending on affordability. If you have financed your home, you will need to ensure that you have sufficient bond cover in place keeping in mind that this cover can be reduced as your home loan reduces. Securing an income protection benefit is critical to ensure that you can continue earning an income should an accident or illness leave you unable to earn an income, whether temporarily or permanently. If you have any form of debt and/or have loved ones who are financially dependent on you in any way, it is advisable to have sufficient life cover to pay for these expenses should you pass away. A well-structured risk management plan should analyse the cover you currently have in place, identify the areas of exposure, and design cost-effective solutions to mitigate those risks, keeping in mind that medical aid and gap cover are important components of your risk management plan.

Building your wealth

Used strategically, time, compound interest, and consistent investing are the most powerful tools for wealth creation. Investment planning involves a number of moving parts including estate structuring, tax planning, risk management and portfolio construction, and it’s important that these components are fully aligned to help you achieve your lifestyle goals. Your investment portfolio should be a comfortable blend of investment risk, appropriate returns, strategic asset allocation and tax-efficient structuring to ensure that you not only reach your goals but remain composed in the face of short-term market volatility. In addition, how you are invested should be consistent with your value system and your worldview.

Leaving a legacy

A well-structured estate plan should leave your loved ones clear as to your intentions and adequately provided for after your death. As such, your estate plan should be designed to ensure that your estate is solvent, liquid and that your loved ones have the financial means to cover their living costs for a period of up to two years while your estate is being administered. Besides ensuring that your will and other testamentary writings are correctly drafted and legally valid, an estate plan could include any number of tools such as life cover, retirement funds, living annuities, trusts, and business policies to achieve your goals and ensure the smooth transfer of your assets.

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