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The importance of a good personal financial plan
Stanbic IBTC team
Not applicable

This is the fifth post in a series aimed at equipping you with the knowledge and skills to enable you to make more informed decisions about your finances and lifestyle. You can read on how to develop a financial plan for a small business here http://bit.ly/19Un1Jr
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A good financial plan helps you lay out your money objectives and plan for your future. It can involve the following things amongst others:

• A savings account
• A health insurance plan
• An educational saving scheme for your children
• Life insurance and disability cover
• Car and household insurance
• Retirement savings
• A well-crafted and up-to-date will.

Life insurance
The purpose of life insurance is to make sure your loved ones have an income in the event of
your passing away. How much cover do you need?
As a guideline, you will need ten times your annual earnings plus enough to cover any debt.

Disability insurance
Disability insurance provides benefits when you are not able to work due to disability or a serious accident. See if you can get disability insurance through the company you work with (it is usually cheaper this way).

Health insurance plans
This is an insurance policy that is taken out from insurance companies that cover you for a set amount per day for your health needs. Coverage will differ based on the amount you pay as premium. This is an important part of your financial plan. Again, see if you can get a medical plan through the company you work for as it is usually cheaper this way.

Retirement savings
The company you work for should have a pension plan for all the employees. Pension plans are compulsory for any company with 5 employees or more. If you do not have a company pension plan, a retirement annuity is a good way to save for your retirement Of course, we think Stanbic IBTC Pension Managers must be your preferred choice of Pension Fund Administrator (PFA). www.stanbicibtcpension.com

You can save at least 15% of your salary with a pension plan. You can withdraw your money through programmed withdrawals when you reach the age of 50 or retire, whichever comes later. The payout you receive is directly related to the amount of money you save.

It is important to find out how much you will need to save for your retirement. A general rule of thumb is that you need to save 25% of your pre-tax income for 25 years in order to have enough money.