How to achieve financial goals
JOBURG - Andrew van der Hoven, head of relationship banking at Standard Bank, offered residents tips on how to live beneath their means as a way to achieve their financial goals.
The expert urged residents to consider using these tips to gain and maintain wealth, including dispelling the misconception that a high income meant wealth.
“While it’s easier for higher-income households to accumulate wealth, research shows that the size of a pay cheque only explains about 30 percent of the variation of wealth among households,” Van der Hoven said.
“What really matters is how much of the income is invested [because oftentimes] many high-income earners believe their pay cheques or profits will keep rolling in and, so, do not make provision for the future.”
Another tip Van der Hoven offered was for residents to budget properly, adding that many wealthy people often committed to budgeting. By doing this, consumers are able to prioritise saving and ensure that every cent spent is considered.
“Residents also need to understand that time is money [and that] money management takes time and effort,” he said.
The expert concluded by stressing that achieving set financial goals had little to do with luck but was rather about a measured approach to building it over time.
“Almost anyone earning a reasonable salary can become wealthy; it starts with making the decision to be proactive about your money and sticking to a plan,” he said.
Other tips Van der Hoven offered included:
- Live beneath your means: Nothing drains your wealth faster than living in a house or driving a vehicle that stretches your monthly budget to the max.
- Don’t act rich: Genuinely wealthy people do not feel the need to parade their wealth by wearing expensive clothes or flashy jewellery.
- Stick to what you are good at: Contrary to popular belief, there are many millionaires who have regular nine-to-five jobs.
- Start saving young: The majority of wealthy retirees began saving in their 20s. They saw the value of investing in a retirement fund that gave them a tax break.
- Millionaires rarely speculate: More often than not, they avoid taking big risks with their cash and stick to tried and tested investments.
- Don’t be afraid to ask for advice: Most wealthy individuals do not go on gut feel; they usually have trusted financial advisors who work with them to choose appropriate investment vehicles.
