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7-step roadmap to riches (it’ll happen slowly, but surely)

(Sponsored by Old Mutual.)

If you don’t get your finances right; you can’t get your future right.

Why do you work?

If it’s only to cover monthly expenses, and to service debts, without considering the future, you may want to continue reading…

(Also read: ‘Love of freedom’ making even well-paid Millennials worse off than their parents)

You need a financial reality check, and work out what you’re spending money on, what your debt obligations are, what assets you have built up and – this one is vital – what your short- and long-term money goals are.

Don’t know where to start?

Here’s a step-by-step guide (to help you prepare to grow your wealth):

  • Start off by drawing up a monthly budget. Knowing where your money is going is a critical step. You can use the free Old Mutual budgeting tool to get started.

  • Pay off your most expensive debt first. In other words, reduce the debt that costs you the most interest (e.g. your store cards).

  • Now take the time and energy to give an in-depth consideration to your long-term goals. This is a very important step in the financial planning process that is unfortunately often missed or skipped. Remember that saving for retirement is your most important long-term savings goal. Starting to save early gives you a longer period in which to invest and generate investment growth, which means you can take advantage of the power of compound interest.

  • For the medium term; it’s important to work towards building up an emergency fund by saving something each month. This will avoid you having to go back into debt if unexpected situations and expenses arise.

  • Now you’re ready to plan for short-term goals. Maybe you plan on travelling in the next few months, or perhaps you’d like to buy a new car?

  • Do not forget to ensure that you are protected against loss of income due to death, disability and critical illness. Income protection is a critical part of being financially empowered. Your investments portfolio and plans will probably run into trouble if one of these unplanned events occur and the necessary plans and provision are not in place.

  • The final step in a financial plan is to draw up a valid will. Your will is a record of how you want your assets to be distributed among your loved ones, and how your liabilities should be paid for.

For more valuable advice on how to create wealth and manage your finances to meet your goals, visit www.oldmutual.co.za or get your tickets today to the upcoming Wealth of Wisdom workshop and join Nandi Madida as she explores her wealth journey and shares cross-generational wealth tips.

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