Effective financial planning for major life events

We go through life with dreams of the goals we would like to achieve. These goals become key events in our lives. That’s why it’s important to plan financially for major life events, to reduce your stress when the time comes.

My Smart Money is a handy feature on the Nedbank Money app that can help you manage your financial planning. It enables you to track your spending, set up budgets, create savings goals and more, with round-the-clock access to all the tools you need for sound financial management – right there on your mobile device.


A step-by-step guide to financial planning for major life events

The first step is to work out your life goals. Do you want to get married? Are you planning to have children? Will you have to pay lobola? Are you eager to start your own business? Do you need a car? Do you want to own your own house? Would you like to travel the world someday? At what age do you plan to retire? To match your financial planning to your personal life goals, you need to ask yourself how you see your future.

This is easier if you arrange your plans for different life events into short-term, medium-term and long-term goals. You can then plan your savings and investments over the short, medium and long term to reach your goals at the right life stage. There are several factors that will influence your choice of savings or investment product. These include:

  • How much can you afford to save or invest?

  • Will you be putting away a lump sum, or contributing every month, or both?

  • What interest rate or returns will your money be earning?

  • What is the tax on this growth?

  • How long will you be able to save before you need the money?

  • Is this a risk-free or low-risk investment, so that you can be confident that the interest will remain within your desired range even in the short term?

  • Or is it a higher-risk investment, which means you’ll need to stay invested for a long time to earn a more predicable return overall?

  • How quickly will you be able to access your money when you need it?

Long-term investment

Long-term investment – for 5 years or longer – can work to your advantage, because your money has plenty of time to grow, and compounded returns and interest mean it grows faster the longer you keep it invested. In addition, you can afford to invest in financial products with a higher risk than would be acceptable in a short-term investment. Your investment has a longer time to recover from any short-term dips in growth, which should even out to a better average return over the full term of the investment.


A financial adviser can help you identify your life goals, and the investments that will best suit your timeframes


Retirement funding is your most important long-term investment, to make sure that you can maintain your standard of living in your golden years. Don’t make the mistake of thinking that it’s so far in the future, so you only need to start worrying about retirement investing in your 30s or 40s. Start investing for your retirement as soon as you have a steady income – this will not only allow you to retire earlier, but it will also mean you’re better provided for when you retire.

Although strictly speaking it’s not an investment, life insurance is also a good long-term risk management tool to take care of your loved ones. It will help you to leave your family well provided for when you pass away, especially if it pays out enough to cover any debt or asset finance that you still owe, or any estate duty and taxes. In that case, your beneficiaries will not have to take money from your estate to pay off these amounts, and they won’t lose assets like a car or a house to cover unpaid debt. Nedbank offers life insurance of up to R2 million with MyCover Life.

When your children are born, you may foresee the need for tertiary education funding 18 years down the line. This is another goal suitable for long-term investment.

Medium-term investments

Investing for the medium term takes 2 to 5 years. If you want to buy your own house, you could use a medium-term investment to raise a decent deposit. This will reduce the size of the home loan you need and make more properties affordable. If you want to start your own business at some point, a medium-term investment will help you save enough capital to kick-start your venture. Or you could be saving to take the holiday of a lifetime in a few years.

Since many South Africans pay lobola when they get married, another wise medium-term investment as soon as a relationship becomes serious might be an account to save towards lobola. If you have children, a decent education will be one of your top priorities. A combination of long-term and medium-term investments can help you afford the best educational opportunities for them from pre-primary to tertiary level.


Short-term investments

Sometimes a key event can be just over the horizon. This calls for a short-term investment of 2 years or less to meet the expense. It could be a wedding, a milestone birthday or anniversary, or the costs of pregnancy and childbirth. Short-term investments can also be used to save a deposit for a car, or to renovate your home. If you plan well, you can meet these kinds of expenses without going into debt.

It’s always a good money choice to get expert advice on your finances, including investments. A financial adviser can help you identify your life goals, and the investments that will best suit your timeframes. Nedbank has a range of savings and investment options over the short, medium and long term to help you plan for every life event.