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Retrenched – What Now?

Making the right financial decisions when you’re retrenched can make a huge difference in the long run.

Mirinda Laurens

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Being retrenched can bring on many negative but also positive feelings: stress, anxiety, loss of control, anger, happiness, opportunity to name a few.

In this time when you have to make serious decisions about your financial situation, letting your emotions cloud your financial judgement could be detrimental. You need to remember that many aspects of your finances remain under your control.

These decisions will have an impact on you, not only now, but also in years to come. Therefore it is critical to gain a better understanding.

Some practical steps to help you keep your finances on track:

Maintain your cash flow

Unfortunately the bills don’t stop when you are retrenched.  If you have never done a budget before then now is the time to start. This will show you how much money you need to pay your bills and still put food on the table.

By knowing how much you need every month you can calculate how long your retrenchment package will last. For example if your retrenchment package is R50 000 and you need R10 000 per month to sustain your lifestyle, your retrenchment package will provide you with an income for five months.

Have your retrenchment package paid into a separate account such as a money market account. Pay yourself monthly by transferring the amount you need for the month as calculated by your budget into your normal account, thereby establishing a temporary pay office. This will ensure that you do not spend more than what is necessary as you might think ‘but I have the money’.

Remain appropriately insured

Risk Cover: Most companies make provision for you to take over your life cover in your personal capacity. This is called a conversion benefit/option.

Bear in mind that you will no longer have the discounted premium benefit under the group cover, so the premium will most likely increase but the advantage is that you will not need to go for medical underwriting. This would count in your favour if your health has deteriorated and you might not be able to get the cover otherwise.

It is very important to maintain your life cover to ensure your debts are settled and your family is taken care of in the unfortunate event of death.

Medical Aid: As in the case with life cover, most medical aid companies also make provision for a continuation benefit. You become a private client and, depending on your needs and affordability, you can change your medical aid option and no waiting periods will apply.

Making the right decision in relation to your retirement savings

Retirement savings are complex and the wrong decision may unnecessarily cost you a significant amount in tax and lost benefits.

There are several options available on exiting a retirement fund. The combination of the options that are best for you will depend on a range of factors – fees, tax and your personal circumstances.  Decisions relating to your retirement savings cannot be ‘reversed’ therefore it is important to consider all factors at play.

  • Transferring your retirement savings to a preservation fund

A preservation fund is like your own private pension or provident fund. If you need to take some or all of your money before you retire, you can, but you can only do this once.  If you do, you will have to wait until you retire (at any time from age 55) to get the rest of your money the transfer will be tax free and you will only pay tax when you take some or all of your money before retirement. The rules of the fund will remain the same. You cannot make additional contributions to the preservation fund

  • Transferring your retirement savings to a retirement annuity

Your fund value is preserved until retirement. The transfer will be tax free. You can retire any time after you have reached age 55. You can make additional contributions to a retirement annuity fund

  • Transferring your retirement savings to a new employer

Your new employer’s fund rules must allow for the transfer, the transfer will be tax-free.  You will only be able to access your money on retirement or resignation and the new fund’s rules will specify your retirement age however the new fund may have different fees and charges. The new fund may have different investment risks and returns 

  • Cash out your retirement savings

If you decide to take you money in cash (all of it or only part of it), you will have to pay tax.Taking a withdrawal before retirement will decrease the tax-free amount that you will be entitled to at retirement. Cashing out your retirement savings may compromise your ability to maintain the lifestyle you would like in retirement. Take time to make these decisions and remove the emotion from them as they will affect the rest of your life.

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Mirinda is a Corporate Financial Services Manager at Consolidated Financial Planning.

Personal Finance

10 Tips To Become A Millionaire This Year

Becoming a millionaire requires changing your mindset and implementing some changes.

Murray Newlands

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Becoming a millionaire may seem out of your reach, but it’s possible with the right attitude and guidance. The fact of the matter is your income can only grow as quickly as you do, so you need to change your mindset to achieve your goal of becoming a millionaire.

Once you have a millionaire mind, you can’t lose it, no matter what financial or business mistakes you make along the way. To get yourself there, you’re going to need some structure. To help you, I’ve outlined the top ten tips you should follow to become a millionaire this year.

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Personal Finance

If You Think These 5 Things, You’ll Never Get Rich By The Time You’re 30

Five common mistakes entrepreneurs make when starting a business and how to correct them.

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Last week, I had lunch with a millennial who wanted some advice about a business he’s starting. After the usual small talk, we got down to discussing his business plan. Within a short time, it was clear that his business idea was great, his plan for executing was fairly solid and he had gathered together a strong team to help him make it happen.

So far, so good. But, to be frank, this guy has no chance of being successful with his current mentality. What it takes to be rich (or successful in any measure) has a lot more to do with your mindset than your ideas and plans.

From the time we started in business at the ripe ages of six and seven, our Grandpa Joe taught my brother Matthew and me many lessons about the details of running a profitable business. Over the years, we learned about how to create a business plan; how to market our products and services; and how to take care of customers, vendors and employees. All this knowledge has been invaluable to us in creating and running successful businesses. But, what our grandfather taught us about attitude and mindset trumps all other lessons.

Without calling out the specific individual I spoke with recently, below are five “hypothetical” attitudes that will get you nowhere in your journey to success – and the attitudes that should replace them.

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Personal Finance

5 Habits That Lead To Millionaire Business Success

You need the right habits if you’re going to succeed.

Timothy Sykes

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What do all millionaire businesspeople have in common? Well, a lot of things.

I found from a recent study that 80 percent of all millionaires still go to work every single day. They’re working people just like me. But, they have to keep themselves in work or it all grinds to a halt. So what are the habits you need to make your business a success?

1. Patience

Nothing is ever going to come easy. You can look at the likes of Steve Jobs and Bill Gates, as well as the other usual suspects, to realize that success didn’t come with their first venture. Many of them failed time and time again. It took patience for them to become successful.

I read an article recently about 36-year-old teacher Andrew Hallam who became a self-made millionaire on a teaching salary. But, in his spare time he invested smart and lived frugally.

It proves you don’t have to inherit lots of money or become an instant success to make a millionaire business.

Related: 4 Ways To Become A Millionaire Even When You Start With Little

2. Dedication

You have to be dedicated to your craft if you’re going to become successful. Going back to Bill Gates again, he started his business in the back of his garage. Now that’s dedication.

It’s what I tell all my students. If they’re not dedicated to this, then they should leave. You need to be able to push through the barren periods if you’re going to reach the oasis of success.

3. Ambition and big dreams

Have you ever heard the quote, “Shoot for the moon. Even if you miss you’ll land among the stars”?

I take that to heart because even if you aim to become a billionaire and miss you still might be a millionaire many times over. Take the Wright Brothers as an example. Not content with creating a successful glider in 1902 they went on to create the world’s first airplane in 1903, making four brief flights in Kitty Hawk. It demonstrates the importance of dreaming big because you never know what you might achieve.

Related: 12 Millionaire Habits To Start Making Serious Money Soon And Build Wealth In A Hurry

4. Learn from mistakes

Every good businessperson will mess something up. It’s inevitable. What’s important is how you learn from your mistakes over time. Do you adapt after making your mistakes?

Millionaire businesspeople always set some time aside to reflect. Then they create a plan of action for ensuring that it doesn’t happen again. Most failed businesspeople put it down to “bad luck.”

5. Focus on niches

This important! Try to take over a whole industry at once and you’ll inevitably get swallowed up by the competition. Start small and control your own niche before moving into another niche. When you master your small area, you can push on and expand.

Related: 21 Choices Millionaires Make That You Aren’t Making But Should Be

You’ll be amazed at how much easier it is to expand after you master your own niche/audience first.

Do you have what it takes? That’s the question I always ask novice businesspeople. You need a plan and you need the right habits if you’re going to succeed.

This article was originally posted here on Entrepreneur.com.

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