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FINANCIAL PLANNING with TOYIN SANNI: Prioritising Financial Security

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Monday, February 8th, 2016
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My name is Toyin Sanni and I am fifty years old, a wife, mother, Pastor and an Investment Banker. I am passionate about helping people achieve their financial objectives and also about empowering women. I am truly impressed by this latest initiative of my highly inspiring friend and sister Erelu Bisi Adeleye-Fayemi and look forward to contributing Articles on Financial Security on this blog.

LIFE LESSONS

I can summarize my key lessons from fifty years on earth in five bullet points:-

  • Honour God because He created you and can make the difference in your life.
  • Honour your seniors as they are God’s instruments of destiny fulfilment.
  • Value and prioritize your key relationships such as your spouse, children, loved ones and family as they add meaning to your life.
  • Treasure and acquire knowledge as it sets you apart from the pack.
  • Age is just a number and you are as old as you feel.

ASPIRATIONS FOR 2016

2015 was slow due to political and economic uncertainty. I am deliberately starting this year in speed-drive mode so I can maximize every opportunity but I’m also conscious that I must be strategic in everything I do. I am growing my circle of influence through my Word for Today series in Social Media and growing readership of my book Yes You Too Can whilst planning to publish my next book this year.

I am eliminating waste and sweating idle assets to create more value and also devoting more time to parenting (though mostly by remote means as two of the three children are away in University). In Ministry, we are doubling church attendance, opening our fifth Parish and relocating our Area Headquarters to its own land.

Professionally, I plan to grow market share across our Investment Banking, Trustee and Asset Management businesses and expand the Securities business through product diversification and a fresh approach to building clientele. My coping mechanisms include more prayers, better communication, flexibility and dynamism.

Financial Security

Every woman deserves the best from life and a key component of a good life is financial security. As you get older, your financial safety becomes more important for reasons such as a shorter career horizon, more health concerns, higher tastes and lifestyle expenditure requirements, more dependants and of course more social engagements and other commitments. Financial security has become even more critical given the unstable current economic environment.

Your financial security depends on the extent to which immediate and future financial needs have been provided for by a combination of your long-term savings and future earnings. Future earnings should preferably be Passive Income rather than Active Income. Passive income refers to earnings from investments rather than from work you hope to do in future which represents Active Income. This is because at this stage in life, your remaining work life is much shorter and employment options typically narrow. Many of us are either already retired or drawing close to retirement.

Investment Assets  that can earn passive income include houses rented out, shares of quoted or unquoted companies earning dividends, Treasury Bills, Bonds and Bank Deposits and units of Mutual Funds and other Collective Investments. It does not include your Owner-occupied house (unless you intend to move out), your personal car, no matter how valuable, or your beautiful collection of jewellery.  Such property may actually be Liabilities if instead of earning from them, you expend significant funds maintaining them. However, your investment assets may include your Art collection or other such valuables if they are kept as a store of value or as tradable assets.

Financial Independence refers to the extent to which your financial provision and well-being depends on your own self rather than other persons such as your Spouse, your Employer, your Parents or Uncle/Aunt (ridiculous at this age but it still happens!). The earlier you achieve financial independence, the better for you and the more secure your finances are, the more peace you will experience as you contemplate old age which is characterised by the reduction/end of active income amidst a need for better and more frequent health care.

Financial Security also measures the stability of your finances in the face of changing macro-economic factors like foreign currency exchange rate hike, equity price crash, rising inflation and volatile interest rates as we are experiencing now. This speaks to how diversified your investment portfolio is.

This can only be done through prudent financial planning as early as possible.

A financial plan is an articulated path to move you from one point to another point over a period of time stipulating the resources to be deployed and steps required. Your plan need not be complex or sophisticated but it must disclose a clear objective, the time involved and means of achieving it.  It will take dedication and some sacrifice. Periodic milestones and rewards for achieving them are advisable components of the plan.

A Simple Plan

Grace who currently earns N75, 000.00 a month wants to grow her personal financial Networth from N500, 000.00 to a minimum of N2m between now (Jan 2016 and her retirement in December 2020 by saving N25, 000.00 per month from now. During this period, she will meet her living expenses from the remaining N50,000.00 of her monthly pay.

Tools

Your tools will include Budgeting, Emergency Savings and Insurance which I will discuss in Series 2 of this column.

To summarize, financial security is especially important at this stage of life and particularly in the current economic environment. To achieve it you must grow income, especially passive income through acquisition and deployment of real assets and you must have a realistic plan to achieve your desired objective.

Thank you and do have a great week ahead.

 

Oluwatoyin Sanni is the Group CEO of United Capital Plc, a leading African investment banking and financial services group providing financing and investment solutions to African governments, companies, and individuals. She is also the Pastor in charge of  LifeGate Area 30, Lagos Province 23 of the Redeemed Christian Church of God.

 

 

 

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