Financially Organised or Disorganised?

Financially Organised or Disorganised?

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How many of us look back and wish we were young again?  I’m sure you‘ll agree we’d only look back and wish we had done the things that we didn’t get around to doing, or excel at, in our younger years.

I remember when my son was growing up my greatest fear was that, when he got a new computer game, he would phone me and tell me he couldn’t wait for me to get home and explain to him how it worked.

When I matriculated in the 60s anyone who got six distinctions was a genius. Nowadays hundreds are awarded eight distinctions and everyone is super computer literate.

So, we take from this that each stage in life has its different challenges and rewards but, there is nothing more important than being organised.

Some years ago the world was transfixed watching the attempts to save the miners in Chile. All eyes were on each miner as they ‘surfaced’, and we all felt a national pride with Chile and celebrated how organised they were.

1989 was the last time I sat spellbound when I watched people clambering over the Berlin Wall in the most chaotic way. Then we read in the small print that 50 people had been blown up by a suicide bomber and security forces were totally disorganised.

That’s why I talk about life being so precious on the one hand and yet on the other, so cheap — the glaring difference shown up by organisation or the lack thereof.

In my opinion, people fall into one of two rather broad financial categories:

  •  Those who don’t know
  •  Those who think they know

I like to subdivide them into ‘financially organised’ or ‘financially disorganised’.

 

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‘Organised’ people are usually able to provide details regarding their expenses and, off the top of their heads, particulars about pension plans and savings accounts.

The ‘financially disorganised’ however, probably have some difficulty calculating very basic expenses, such as the weekly grocery bill and will, more likely than not, look at you puzzled if you ask about their pensions or insurance plans.

To become ‘financially organised’ you need to know what your monthly, as well as annual, expenses are.

It’s necessary to be up to date with all your affairs and this involves being acquainted with the details of your savings and retirement plans, insurance, tax, estate plans and long-term wealth-creation investments.

Unfortunately, these details are still not sufficient.  It’s just as important to understand precisely how the different aspects of your finances link together. Each component of your financial plan needs to fit together and be aligned to form a holistic picture.

The biggest mistake that investors make is when they make investments in isolation and their portfolio becomes skewed or misaligned.

Planning ahead is essential if things are not going quite as well as you expected.  You should always have a backup plan for big, unexpected, expenses such as a wedding, a new car or a house renovation.  If at all possible, one should try to ‘squeeze’ an allowance into one’s annual budget for these expenses. This could even result in a change to your financial strategy.

Only once you understand your present and future economic needs, can your financial plan be considered sensible and ‘organised’. But I do understand that certain factors can change continually and, when this happens, all you need to do is revert to your existing plan to determine what changes need to be made and implement them.

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Bryan Hirsch
BRYAN HIRSCH has been in the financial services industry for 47 years and is a director of Bryan Hirsch Colley & Associates. He has written two books, the first Bryan Hirsch’s Guide to Personal Finance and more recently, Steps to Financial Freedom. Bryan has written for many of South Africa’s top financial and business publications, has been a weekly guest on Radio SAFM for 18 years, and has his own weekly TV show You & Your Money on Summit TV.