Personal Financial Management: The Southern African Guide To Personal Financial Planning 4e

Personal Financial Management, now with additional examples and case studies for the African context, makes use of the Swart Model for total personal financial planning. The nine key personal financial planning areas -- career, income tax, estate, investment, protection, credit, healthcare, retirement and emigration planning -- provide the ultimate guide in financial planning. This is an essential companion for undergraduate students of Personal Financial Management as well as a resource for people needing guidance in their personal finances Front cover 1 Title page 2 Imprint page 3 Contents 4 Preface 11 About the author 13 Chapter 1: Personal financial planning 16 1.1 Introduction 17 1.2 The importance of personal financial literacy 18 1.3 The importance of personal financial planning 22 1.4 Conceptual framework 24 1.5 The financial planning cycle 26 1.6 Your own personal financial planning 27 1.7 The personal financial planning process 28 1.8 The advantages of personal financial planning 34 1.9 Personal financial planning areas 34 1.10 Summary 41 1.11 Self-assessment 41 References 41 Chapter 2: Measuring and assessing personal financial performance 43 2.1 Introduction 44 2.2 Annual finanacial statements 45 2.3 The personal financial budget 52 2.4 Summary 73 2.5 Self-assessment 73 References 73 Chapter 3: The time value of money 74 3.1 Introduction 76 3.2 Some calculations 76 3.3 Some special applications of time value 84 3.4 Calculations with a financial pocket calculation 86 3.5 Summary 105 3.6 Self-assessment 105 References 105 Chapter 4: Credit planning 107 4.1 Introduction 108 4.2 Application for credit 114 4.3 Handling a debt crisis 116 4.4 Debt self-management 119 4.5 Debt and legal remedies 121 4.6 Banking 125 4.7 Credit instruments 135 4.8 The credit contract 140 4.9 Buying and selling a car 140 4.10 E-shopping 146 4.11 E-banking 146 4.12 Financial inclusion 146 4.13 The National Credit Act 34 of 2005 (NCA) – Introduction and role 148 4.14 The Consumer Protection Act 68 of 2008 (CPA) 154 4.15 Summary 158 4.16 Self-assessment 158 References 158 Chapter 5: Career planning 160 5.1 Introduction 161 5.2 The importance of career planning 163 5.3 Choosing a career 163 5.4 The need for education and training 165 5.5 Factors that influence earning power 166 5.6 Job-hunting 166 5.7 Your own business 168 5.8 Being unemployed 169 5.9 Summary 173 5.10 Self-assessment 173 References 173 Chapter 6: Income tax planning 175 6.1 Introduction 176 6.2 Kinds of tax 178 6.3 The Income Tax Act 58 of 1962 180 6.4 The tax year 180 6.5 Standard Income Tax on Employees (SITE) 181 6.6 Pay-As-You-Earn (PAYE) 182 6.7 Provisional tax 182 6.8 How to complete your tax return 183 6.9 Your accountant and/or auditor 186 6.10 How to calculate taxable income and tax liability 186 6.11 Income tax pitfalls and how to avoid them 191 6.12 Retrirement/severence packages and tax planning 193 6.13 Tax-free Investments Accounts (TFIAs) 195 6.14 Summary 196 6.15 Self-assessment 196 References 196 Chapter 7: Starting a business: Entrepreneurship 197 7.1 Introduction 198 7.2 What is an entrepreneur? 200 7.3 Business entrepreneurial opportunities 203 7.4 A family business 204 7.5 Forms of business ownership 206 7.6 CCs and companies: The New Companies Act 71 of 2008 208 7.7 The business plan 208 7.8 Financing a small business 214 7.9 Your business location 218 7.10 Business registration 219 7.11 Business documentation and records 219 7.12 Business insurance 219 7.13 Employment 219 7.14 Your business and your bank 219 7.15 Identifying business problems 220 7.16 Legal business matters 220 7.17 Your business advisers 221 7.18 Succession planning 221 7.19 E-business 221 7.20 Manage your business 224 7.21 Business growth 227 7.22 Summary 230 7.23 Self-assessment 230 References 230 Chapter 8: Buying a business 232 8.1 Introduction 234 8.2 Assessing financial perfomance 235 8.3 Proplems an investor faces on purchasing a small business enterprise: The assessment of financial perfomance 243 8.4 Determining the purchase price 249 8.5 The advantages and disadvantages of buying a business 250 8.6 Business premises: Lease, buy, build or work from home 252 8.7 Summary 254 8.8 Self-assessment 254 References 254 Chapter 9: Buying a franchise 255 9.1 Introduction 256 9.2 What is franchising? 258 9.3 Checklist for the franchisee 263 9.4 A checklist for the franchisor 266 9.5 Financing the franchise 267 9.6 Franchising as a way to expand your business 269 9.7 The regulation of franchising 270 9.8 Franchise opportunities 271 9.9 Global franchising 271 9.10 Summary 272 9.11 Self-assessment 272 References 272 Chapter 10: Estate planning 274 10.1 Introduction 276 10.2 The estate planning process 278 10.3 Estate planning pitfalls and how to avoid them 301 10.4 Your lifestyle and estate planning 305 10.5 The administration of an estate (winding up) 316 10.6 Summary 321 10.7 Self-assessment 321 Refrences 321 Chapter 11: Investment planning 323 11.1 Introduction 324 11.2 Conceptual framework 325 11.3 Investment principles 327 11.4 Investment pitfalls and how to avoid them 329 11.5 Choosing a broker 334 11.6 Investment strategies for different ages 343 11.7 Investment criteria 346 11.8 Types of financial investment 349 11.9 Investment approaches 359 11.10 Computer programs available 361 11.11 The Johannesburg securities exchange (JSE) 362 11.12 Valuation methods 362 11.13 Buying shares 366 11.14 Share prices in newspapers 371 11.15 Economic indicators on television 371 11.16 Severence or retirement packages: How to invest? 372 11.17 The economic cycle: Your investment cycle 377 11.18 Investor protection 379 11.19 Summary 383 11.20 Self-assessment 383 References 383 Chapter 12: Buying a residence 385 12.1 Introduction 386 12.2 Motivation for buying a house 387 12.3 Valuation of a house 390 12.4 Cost implications of the registration procedure of deeds of transfer and mortgage bonds 392 12.5 Cost-items related to buying a house 394 12.6 The estate agent: A profile 401 12.7 The contract 417 12.8 Raising finance for the purchase of a house 428 12.9 Practical steps: Home buying 440 12.10 Practical steps: Selling your house 446 12.11 Practical steps: Moving house 448 12.12 The Consumer Protection Act 68 of 2008 (CPA) 449 12.13 The National Credit Act 34 of 2005 450 12.14 The Rental Housing Act 50 of 1999 450 12.15 The Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998 (PIE) 450 12.16 Summary 450 12.17 Self-assessment 451 References 451 Chapter 13: Buying fixed property 455 13.1 Introduction 456 13.2 The investment process 459 13.3 Types of investment in fixed property 470 13.4 Property financing 483 13.5 Different ways to own property 486 13.6 Property contracts 487 13.7 Government control over property 489 13.8 Administration of property 490 13.9 Sources of information in the real estate industry 491 13.10 Summary 492 13.11 Self-assessment 493 References 493 Chapter 14: Offshore investments 495 14.1 Introduction 496 14.2 Research before investing in foreign countries 503 14.3 Offshore investment alternatives 508 14.4 Your estate 519 14.5 Summary 523 14.6 Self-assessment 523 Reference 523 Chapter 15: Protection Planning 525 15.1 Introduction 526 15.2 Household risks 527 15.3 Types of risk 529 15.4 Classification of pure risks: The subject of insurance 529 15.5 Risk management 530 15.6 Needs and insurance 531 15.7 Summary 549 15.8 Self-assessment 549 References 550 Chapter 16: Healthcare planning 551 16.1 Introduction 552 16.2 The best investment 553 16.3 The nature and importance of medical cost 557 16.4 New healthcare legislation 560 16.5 Provision for medical expenses 562 16.6 Medical schemes 562 16.7 Medical insurance 564 16.8 Healthcare products: Where should I start? 565 16.9 Alternative methods of healthcare 568 16.10 Healthcare for your retirement 568 16.11 Further information 568 16.12 Summary 568 16.13 Self-assessment 569 References 569 Chapter 17: Retrirement planning 571 17.1 Introduction 572 17.2 The importance of retirement planning 574 17.3 The income gap after retirement 578 17.4 Methods of providing for retirement 583 17.5 Other retirement planning issues 615 17.6 Summary 629 17.7 Self-assessment 629 References 629 Chapter 18: Emigration planning 631 18.1 Introduction 632 18.2 Can I afford to emigrate? 635 18.3 To which country should I emigrate? 636 18.4 Which assets and how many (how much capital) may I take with me? 636 18.5 What will happen to assests that are left behind? 637 18.6 May I transfer income from my remaining assests to a foreign country? 639 18.7 Should I place my South African assests in a trust? 640 18.8 What will it cost to emigrate? 640 18.9 Which financial factors should I consider about South Africa? 640 18.10 Which financial aspects should I consider about the foreign country? 640 18.11 What about the exchange rate and the value of the rand? 640 18.12 How do I go about emigrating? 640 18.13 Offshore investments 641 18.14 Summary 641 18.15 Self-assessment 642 References 642 Index 643