Bajans urged to take control of finances

Financial experts are encouraging individuals and business owners to engage in financial planning in order to get more bang for their buck.

Founder of the financial advisory firm Vanilla Financial Architecture Inc. Wayne Ifill says by engaging in financial planning and eventually achieving financial control, individuals would be better able to plan their retirement, be less anxious about monthly expenses and be in a better position to recover in the event of a natural or man-made disaster.

“You will find that when you get to this stage where you have financial control you are a lot less anxious about those monthly bills, annual bills and those things that come around every three, four or five months, because you are controlling your money to the extent that every month you are making provisions for those monthly, semi-annual and annual expenses,” he said.

“The goal of financial control is to reach the stage where you know how much money is coming in and you control your spending to the extent that there is some left over every month after you meet all your commitments,” he added.

His comments came in a presentation on Monday night during the first of a three-part online series hosted by the Barbados Coalition of Service Industries (BCSI) and the Barbados Association of Insurance and Financial Advisors (BARAIFA) and at a time when Barbadians continue to express concern about the rising cost of living and stagnant wages.

Speaking on the topic The Principles of Financial Planning for Home and Business, Ifill said there are five main areas to consider when embarking on financial planning – financial goals, financial control, financial protection, financial growth and financial enjoyment.

“Financial control has to do with knowing how much money comes in every month and deciding beforehand how much and where it will go in each category such as paying for utilities, saving for a rainy day, saving for that mortgage, buying school clothes and paying school fees. . . Even if you are self-employed or your income varies from month to month or you have debts to deal with, financial control is still possible,” he said.

Financial protection, he said, had to do with having enough funds put aside to still be able to achieve certain goals, enjoy life and care for loved ones in the event of a disaster, sickness or disability.

He also advised that good financial planning should take into consideration the likelihood of job loss and prolonged unemployment.

Ifill noted that in order to achieve financial growth, there was need for more focus to be placed on investing instead of mere savings.

“You need to reach a stage where you have money left over which you can put to work. So while you are going to work, this money is also going to work so that your money can grow,” he advised.

Briefly touching on the issue of retirement, Ifill indicated that proper financial planning can result in the funding of a lifestyle that one desires at that stage.

“Of course you are to enjoy your life all through your working life, but I want people to look forward to the time when they don’t have to go to work every day to really enjoy life,” he added.

Noting that the amount that an individual works for should not prevent him/her from “paying yourself first” and engaging in financial planning, he said direct deduction was one way of maintaining discipline and achieving financial control.

“Control is also a personal thing and it depends on the individual,” he added.

Meanwhile, zooming in on micro and family-owned businesses, financial services specialist Roderick Nurse, Chairman of the BARAIFA, said there were a number of risks associated with operating a business and it was therefore critical for business owners to plan with those risks in mind as they pursue their goals.

He explained that financial planning for business operators should take into account tax obligations, debt, investment, retirement, education, insurance and estate planning. He also pointed to the need for proper record-keeping.