Tag: Financial Health

What is Your Financial Dream?

A New Year brings new dreams. We set New Year resolutions. We are ready to take-on new challenges. Popular items on our wish lists usually include goals to live a healthier lifestyle; exercise more frequently; lose weight or spend more time with our loved ones.

The focus is often more on our physical appearance and we tend to ignore our financial wellbeing. We work-out relentlessly to lose those extra kilograms we gained during the December holidays; diligently following an exercise programme or meal plan. We often resist spending time to improve our financial status even though financial difficulty is one of the biggest causes for stress in the majority of households. What is your financial dream though?

  • Maybe you want to become financially stable and no longer have to constantly stress about money?
  • Maybe you want to become debt-free?
  • Will 2018 be the year you are going to buy that dream car?
  • Is buying your first home or maybe upgrading to your dream home on your wish list?
  • Are you dreaming about creating a better lifestyle for yourself and your loved ones in 2018?
  • Do you want to set yourself up to retire comfortably?
  • Are you dreaming about that exotic overseas holiday?
  • Do you want to ensure you put away enough money to pay for your children’s education?
  • Maybe you want to build up a nest egg that will give you peace of mind when something unforeseen happens?
  • Or maybe you want to start with that business on the side to create additional income and can help you to achieve financial freedom?

Take time out to think about your financial dreams. Think about your short-term dreams for 2018 as well as your medium (2-5 years) and longer (5-10 years) term dreams. Write down your financial dreams, no matter how small or big they are. Thereafter create a vision board for yourself with pictures to remind you of all your financial dreams. Put your vision board up on the wall of your bedroom, in your study or at your desk at work where you can see it on a daily basis. The very first step towards making a dream a reality is to start visualizing it.

Written by Ronel Jooste

CA(SA) and Financial Coach

Contact Ronel: ronel@financiallyfitlife.co.za

For more information about my financial wellness programmes click here

Master Finances: Health Terms

Since October was Breast Cancer Awareness month, we will be focussing on mastering financial terms relating to healthcare in this article.

Income Protection

What is Income Protection and why is it beneficial? Income Protection (also referred to as ‘salary protection’) is an insurance policy that covers policyholders who are unable to earn an income due to serious illness, accidents or unemployment depending on the nature of the policy. The policy pays out a monthly tax-free ‘salary’ during a period that the policyholder is not earning an income to help cover living expenses. This type of policy is very useful for people who are self-employed and don’t have paid sick leave or people losing their jobs. Make sure to understand the policy’s conditions and exclusions.

Dread Disease Cover

Dread disease cover (also referred to as severe illness or critical illness cover) is an insurance policy that covers the policyholder in the event of being diagnosed with a specific severe illness by paying out a lump sum. The illnesses that are covered are predetermined and are listed in the insurance policy. Cancer, heart attacks and strokes are typically classified as serious illnesses. Ensure that you do understand your policy in terms of any pre-existing medical conditions; the list of illnesses that are covered and to what extent as well as the exclusions.

Prescribed Minimum Benefit (PMB)

The Medical Schemes Act refers to ‘Prescribed Minimum Benefits’ or PMB. PMB is a set of defined benefits to ensure that all medical scheme members have access to certain minimum health services, regardless of the benefit option they have selected. The aim is to provide people with continuous care to improve their health and well-being and to make healthcare more affordable. Medical schemes have to cover the costs related to the diagnosis, treatment and care of:

  • any emergency medical condition;
  • a limited set of 270 medical conditions (defined in the Diagnosis Treatment Pairs);
  • and 25 chronic conditions (defined in the Chronic Disease List).

Health Insurance

Health insurance (also referred to as medical insurance) is an insurance policy that pays for medical expenses incurred by the policy holder due to illness or injury. Health insurance can pay out directly to the policyholder. Health insurance policies are issued by insurers and are governed by the Long-term Insurance Act while medical aids are governed by the Council for Medical Schemes. The policy will pay out the stated amount and can assist to cover shortfalls not covered by the medical aid. Health insurance is more affordable than medical aids but provides more limited cover. It is a good idea to have health insurance in combination with a medical aid. Contributions (premiums) paid to health insurance policies are not deductible for tax purposes.

Gap Cover

Gap cover (also known as Medical Top-Up insurance) is an insurance product that covers any shortfalls between what service providers charge for a hospital procedure or emergency surgery and what the medical aid pays from your medical scheme hospital benefit. However don’t assume that you will be covered 100% when you have gap cover in addition to your medical aid. There are certain exclusions, read the fine print of the contract.

Your Tonic for Healthy Finances

Many people strive to be healthy. Health refers to more than only having a healthy body. Optimum health includes a healthy body; a healthy mind and healthy finances. There is a direct and indirect relationship between a healthy body and financial wellbeing. Financial difficulty can result in increased stress levels; lack of sleep; reduced energy levels; eating disorders; and alcohol abuse to name a few, which could in turn impact on physical health. A lack of financial resources can also have a direct impact on being able to afford proper health care. The other side of the coin is also true – poor health or illness can ruin your financial wealth.

You often need a tonic to boost your physical health. You also need a tonic to boost your financial health. The following points will definitely act as a tonic to healthier finances:

Monitor your expenses by using a budget

Refrain from over-spending. Compile a budget and keep to it. Divide your budget into the following categories: income; savings (i.e. investments, saving for a holiday, etc.); “cannot live without expenses” (i.e. groceries, water and electricity, medical aid, etc.); “nice to have expenses” (i.e. hairdresser, DSTV, entertainment, etc.) and emergency expenses (i.e. medical expenses which are not covered by the medical aid, etc.).

 

Make saving a priority

South Africa is one of the countries with the poorest saving habits. Saving should be a priority; not something that happen on an ad-hoc basis. Save at least 10% of your monthly income after deducting tax, pension fund contributions and medical aid contributions. If you do not have any debt to repay, increase your savings to at least 30% of your monthly income.

Avoid debt at all cost

Debt is easily available which explains why more than 11 million of South Africans are over-indebted. Stay debt free as far as possible. If you cannot buy it cash, do not buy it. Whenever you have additional cash, use it to repay your debt.

An emergency fund is a necessity

Build up an emergency fund that you can use for unforeseen big expenses. Having funds available to use during an emergency gives you peace of mind especially in a medical emergency. Use the funds for real emergencies and don’t be tempted to use the money for an overseas trip or the latest fashion trends.

Take care of your health

Good medical care is expensive. Don’t underestimate the importance of having proper medical aid cover in place. It doesn’t matter how healthy, fit or strong you believe you are, it can change in a split second. If you fall ill, you want the best medical care possible. You might get away with only having a hospital plan, provided you have an emergency fund in place to cover unforeseen medical expenses.

Protect yourself and your loved ones

Hopefully you will never need it, but rather be safe than sorry. The amount of your life cover depends largely on your dependents and your level of debt. Disability cover and dread disease cover become critically important in the event of an accident or you do fall ill.

Retirement planning is crucial

Less than 6% of South Africans will be able to retire comfortably without having to drastically change their lifestyle. The younger you start planning and saving for your retirement the better. Review your retirement savings on an annual basis and adjust your contributions accordingly. Remember you also receive a tax saving for retirement contributions.

Don’t leave chaos behind when you die

Ensure that you have a will and that you keep it up to date. It is especially important to update your will when big life events happen like getting married, having children or getting divorced. Unfortunately death is a reality for all of us and you don’t want to leave chaos to your loved ones when you die.

Become financially independent

Too many women are still dependent on their partners to financially provide for them and their families. High divorce rates, crime rates, men dying young due to critical illnesses and retrenchments are a few factors that can force a woman to become the breadwinner and having to provide for herself and the family. Set a goal to become financially independent and actively strive to achieve it. You will never regret this decision.

Equip yourself with financial knowledge

Financial literacy will enable you to make good financial decisions without having to rely on partners, financial planners or employers. Read books, attend seminars, do online courses or get yourself a financial coach. You are the only person who will always have your best interest at heart.

You are the architect of your future. You can continue to be stressed about your financial situation or you can actively do something to change it. You need to exercise, eat a healthy balanced diet and get sufficient sleep to improve your physical health. Similarly you need a financial plan, discipline and knowledge to improve your financial wellbeing. Don’t neglect to drink your tonic to boost your financial health.

Unedited version of the article published in SA Womens Health, August 2017

Written by Ronel Jooste

CA(SA) and Financial Coach

Contact Ronel: ronel@physeqfit.co.za

For more information about my financial wellness programmes visit my website: www.financiallyfitlife.co.za/financial-wellness