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Flexibility in Financial Planning

5 January 2021

What exactly does world-class financial planning look like? We believe that one feature in this approach is flexibility.

Flexibility is the ability to bend without breaking (or going broke). Every financial guru out there will have their interpretation of what it means to be financially flexible. Essentially, it boils down to accessing funds to satisfy a crisis or opportunity. It means being smart about how we use our monthly income and finding ways to make our money do more. Usually, in these situations having access to capital means having options.

When it comes to long-term financial and retirement planning, many individuals rely on static, set-and-forget plans. This is entirely the opposite of what it means to be financially flexible. To maintain flexibility, we need to review our policies and plans and make changes in accordance with our ever-shifting livelihoods.

A key to financial freedom is peace of mind, and knowing you are prepared for the what-ifs in life. There are two significant areas for concern that come to mind:

Cash Flow Changes

Few of us can accurately predict our future income. Everyone hopes that there is a constant rise in the overall income every year. There are uncontrollable factors like government policies, interest rates and taxes that can negatively affect the financial plan. And there are positive avenues we can pursue like switching to a job with a higher salary or renting out a section of your house as an Airbnb. How can individuals incorporate cash flow in their planning? Living below one’s means and prioritising saving is fundamental to weathering any temporary or even long-term hits to income and cash flow.

Health Changes

Health is the single most important element in financial planning. Poor health can have a devastating economic and emotional impact on families. Both disability and life insurance are essential. Ensuring that you have the proper insurance coverage protects your ability to earn, provides a regular stream of income in the event of disability and offers financial protection to your next of kin in the event of death.

Adopting flexibility into our financial plan has the benefit of providing future stability and greater adaptability. Life can sometimes throw us a curveball, and global events can throw our timelines for a loop.

At SFP, we integrate flexibility into our timelines and our financial philosophies – providing you with the means to achieve long-term financial success.

Sanlam Life Insurance is a licensed financial service provider.
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