More than three-quarters (78.5%) of South Africans have faced an unexpected life surprise at some stage or other. This surprising finding was one of many interesting results from Sanlam’s recent ‘Life Surprises’ survey conducted among South Africans over the age of 50.

The surprises felt most severely, according to the survey, were financial events, such as the loss of savings, a business closure or a retrenchment. To ensure you’re financially prepared for a curveball, Karin Muller, head of Growth Market Solutions at Sanlam, suggests these five steps as good starting points:

Be prepared in five steps

  1. Start and maintain an emergency fund
    This should be equal to between three and six months’ worth of your monthly salary. Remember that you need to access it quickly, so an investment such as a money market account is a good choice. This will not solve all your problems, but it will provide a healthy cushion in an emergency.
  2. Have a financial plan
    Work with a professional financial adviser to draw up an all-round financial plan for your life – focusing on the short, medium and long term. As part of this process, think through some of the most financially impactful events which you may face – a loss of income through illness, retrenchment or loss of a loved one who is a breadwinner – and factor these into your planning.
  3. Have the right risk cover in place
    This forms part of your financial planning, but is worth talking about separately. Risk cover is designed specifically to help you provide financially when there’s an unexpected event in your life. Included in this category of insurance products are life cover, disability cover, severe illness cover and income protection. Being able to ensure that your financial needs are covered if a big event takes place is not only essential for your own future wellbeing, it will also protect your family from having to step in and assist if you were not prepared.
  4. Ensure you are saving adequately
    Unfortunately many people see saving, for instance for retirement, as a grudge purchase, when in fact it is a process which actively builds up assets and can contribute measurably to your lifestyle and financial position. By making the right savings plans, you lessen the effect of an unexpected event and avoid becoming a burden on your loved ones.
  5. Make sure you have an up-to-date will
    A will protects your family from the fall-out of a big life event. Your will should clearly state what your wishes are so that your family is not placed in a difficult financial position when you are no longer here.

The survey – commissioned by financial services provider Sanlam – was conducted during July and August 2014 and surveyed a sample of 600 adults drawn up to be representative of 50 year olds and above, of any race, earning a collective household income (all sources) of at least R14 000 per month, and living in any of the four main metropolitan areas ie Cape Town, Durban, Johannesburg and Pretoria, South Africa.

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