10 myths about financial planning in South Africa debunked

FINANCIAL planning myths, we have all heard them. With financial literacy not being a priority in most school curricula and many people growing up without guidance from parents on how to manage money, it’s no wonder that so many South Africans find themselves learning the hard way once they start earning an income. Unfortunately, those ‘hard money lessons’ often lead to long-term consequences such as unsustainable debt and delayed financial freedom.

- BUHLE NXUMALO

Here are ten common myths about financial planning and the truth behind them.

Financial planning is only for the wealthy

Myth: Only high-net-worth individuals need a financial plan.

Reality: Everyone, regardless of income, can benefit from a financial plan.

Wealth isn't defined by how much you earn but rather by your money habits. Many self-made wealthy individuals credit their success to cultivating healthy financial behaviours early on. The TV show “I Blew It” offers sobering examples of lottery winners who lost it all, proving that without a solid plan and good money habits, even millions can vanish.

Financial planning is for anyone looking to set goals, manage debt, and build a better future.

You only need financial advice close to retirement

Myth: Planning starts at 55.

Reality: Starting early allows for greater growth and less stress later in life.

Financial planning has no age limit. The earlier you begin, the better you can benefit from compound interest and long-term investment growth. Younger investors can typically take on more risk, while older investors may shift to more conservative strategies as retirement nears.

Regardless of age, the fundamentals remain the same: set goals, manage a budget, and invest wisely.

Financial planning is a once-off exercise

Myth: You draft a plan once and you're done.

Reality: Your plan should evolve with your life.

Life changes, marriage, children, job changes, divorce, or illness, and so should your financial plan. Meeting with your adviser annually (or during major life events) ensures your goals, strategies, and policies stay aligned with your personal circumstances.

Financial advisers just sell products

Myth: Advisers only want to sell insurance or investments.