Let me borrow and translate a verse from my favourite Afrikaans rock band Fokofpolisiekar’s song, Tygerberg Vliegtuig:
“All the instructions they give us. Work, get married and have children. And possibly then suffer from depression. Someone has to ask why. Someone has to ask why.”

Ask why, and while you’re at it, maybe also ask whether it’s necessary to get married to the bank? Because a home mortgage will be a multi-decade “marital” commitment for those who prioritises home ownership.

There is nothing wrong with the conventional order of life events: study, work, get married, buy a house, raise a kombi full of toddlers, retire etc., but with it comes a serious commitment and very specific financial journey. Without a smart and simple financial plan guiding you throughout this order of life events, you will most likely get depressed at some point.
There is, however, great news if you are young. You have time. Use it wisely.

Ok, so you were fortunate enough to attend a 4-year long festival after high school at your local university, and against all odds, you managed to graduate with a tertiary qualification. You land the first job opportunity, great. You know nothing about financial planning or investing, but a random guy once told you that you must save 15% of your pre-tax salary for the rest of your painful working career if you want to retire at 65 and maintain your lifestyle after retirement.
Maybe that’s not your intention at all, but anyway, let us fast forward 42 years and then look back. You messed around for 10 years after graduating and only started contributing towards a retirement fund at 33 because your employer at the time forced you to. You indeed ended up marrying the bank, re-mortgaged a couple of times throughout your working career and paid so much mortgage interest and home maintenance costs that you are left with debt at retirement. You lived way above your means, and you virtually have no discretionary savings at your disposal as you mostly serviced credit card debt with any spare cash.

It’s a mess.

The unfortunate reality is that young working South Africans do not have a clue about financial planning, how important it is or where to even start. All you needed to do was to take advantage of your biggest asset in the form of time, challenge convention, put a smart and simple financial plan in place and let compound interest do the rest. Easy.
Here is a guide to smart and simple financial planning (it really doesn’t have to be more complicated than this):

• As a young person, continuously re-assess what your measures of happiness are and what you want out of life, as these are key determinants of your financial journey. What career do you want to pursue? Where do you want to live, and what lifestyle do you prefer? And how do you plan to maintain a healthy work-life balance?
• Money is not everything, but it gives you options. So you must work to earn money.
• Find or create a job that best utilises your skills and passion. Work extremely hard, and the money will come.
• Connect with a likeminded financial adviser whose first task is to coach you financially.
• Collaborate with your financial adviser to design and implement a smart and simple financial plan for you and stick to it.
• Here is a guide to a smart and simple financial plan:
  • Compile a budget and live below your means – the contrary constitutes financial suicide.
  • This will enable you to save way more than what convention suggests.
  • The more and the longer you save, the sooner you can retire or become financially independent.
  • A property can be a great investment, but do not get married to the bank if not necessary. In other words, seriously consider renting a home as opposed to buying with a mortgage as the associated costs often do not outweigh the benefits, especially if within a weak property market.
  • Take advantage of the tax benefits of retirement annuities and tax-free savings accounts.
  • Diversify your investments globally as South Africa represents less than 1% of the global financial market.
  • Be sure not to pay exorbitant fees on retirement and investment products. Long-term modelling suggests that you could end up with 30% – 50% less money if you paid too much in fees.
  • Ensure that you have appropriate insurance in place for yourself and your loved ones in the event of death or disability.
  • Draft a will and ensure that your estate planning is well understood and in order.

It is sometimes necessary to challenge the convention, especially when it comes to financial planning. Young people have an invaluable asset in the form of time, so capitalise on it with a smart and simple financial plan.