Lee Hancox, Head: Channel and Segment Marketing at Sanlam.
With tightened belts, and cost-cutting being a necessity for many South Africans right now, DIY options can be pretty compelling. Constructing a coffee table or making your own outfit, instead of buying one, may have crossed your mind as a way to save costs.
While in some instances, DIY really can help you do more with less, when it comes to high impact financial decisions like those involving marriage or retirement plans, resorting to DIY may not always be the best move.
Money is emotive. Whether we’re thinking about what we’ll leave behind for our loved ones, or how much we’re saving for our future selves, or whether we’re panicking because the market has taken a turn, decisions can sometimes be hard to make.
That’s when a non-biased, level-headed financial planner can prove invaluable to avoid quick decisions that have long-term consequences. Not only this…whether for a specific need, or a holistic plan that can take your needs into consideration, each person needs an appropriate plan that is specific to their circumstances. To simplify the process, and make informed decisions, a good financial planner is invaluable.
Here’s a rundown of some things you can DIY, and others you probably shouldn’t.
1. DIY your vows, but not your ‘prenup’.
What can be more romantic than writing your own vows? However, when it comes to a prenuptial agreement, call in the experts: The assistance of a lawyer and financial planner is critical to ensure the contract is fair to both parties and covers all the legal bases. This is even more important and complex when you’re ‘blending families’ and there are children involved.
2. DIY your tax returns, but not the more complicated tax tasks.
Your tax returns may usually be simple to DIY. However, with tax, things can get complex quite quickly. For example:
• Do you know how to maximise your tax deductions if you earn commission?
• Do you know how to structure your estate to be tax efficient? • Do you know how to create a foreign and local will for offshore inheritance to reduce tax?
• Do you know what you can claim for if you have a rental property?
These are all scenarios where advice can really help. If you own a business and are registered as a provisional tax-payer, you could DIY your taxes, but it’s time-consuming and may divert your attention away from your business. An accountant or bookkeeper can be a serious asset to run your books for you.
3. DIY a brand-new business idea, but get expert help on the complexities of setting up a business yourself.
If you’re setting up a business, have you decided whether you’ll trade as a sole proprietor, a company or a partnership? What’s the most tax-efficient way to structure a new business?
Will you be VAT registered? How do you split up the business and your personal finances? What benefits will you offer your staff, should you employ a team? Do you have the time to go through the rigmarole of registering as a legal entity yourself?
A business coach, financial planner, bookkeeper or lawyer (depending on your needs) can add a lot of value, giving you time to focus on the important things.
4. DIY your dream retirement (visualise what you want this to look like) but don’t DIY the plan to get there!
Trustees surveyed in the Sanlam 2018 Benchmark survey believe that 85% of retirement fund members are not in a position to retire at the same standard of living they enjoyed whilst employed. Create a detailed picture of what you want your twilight years to look like. But know that getting retirement right requires a serious long-term plan that’s perfectly tailored to your needs, goals and risk profile. You just can’t afford to get it wrong.
5. Don’t DIY your divorce.
Sadly, one in four marriages doesn’t make the ten-year anniversary mark in SA.
Though you might want a divorce to be over and done with fast, never opt for a ‘quickie’ divorce. Take some time to really think things through – like your child’s education costs, maintenance payments that increase in line with annual inflation, where you’ll live, if you’ll need to change jobs to account for your change in income – and work with a lawyer and financial planner to ensure the divorce is fair – both now and in the future.
6. Don’t DIY your will.
Wills can be complex. For example, you may bequeath assets while forgetting that you’ll first need to settle your debts. There are also considerations like how to take advantage of estate duty exemptions, and how to make sure your children are provided for. These are legal documents, so it’s highly advisable to involve a lawyer and financial planner.
DIY finances can get complicated when there are curveballs and can take up a huge amount of time. It becomes like a second job. What if you suddenly get sick? Or the market takes a turn, and you’re tempted to withdraw your investments? That’s when you’ll need help to make informed decisions.
To top it all, the internet is saturated with advice, so it can be tricky to identify legitimate sources. For example, bloggers and influencers might have the best intentions, but not the experience or qualification to back-up the finance advice they’re putting out there.
When it comes to your finances, a good financial planner is there to help put all the pieces together, providing trustworthy support.