- Lana Visser-Galant
Starting your first job is an exciting milestone. It represents independence, possibility, and the beginning of building a life on your own terms. But with your first income comes something just as important: your ability to earn. In your 20s, this is your greatest financial asset. Not your savings. Not your car. Not your investments. Your income is the engine that drives everything else. And like any valuable asset, it needs to be protected.
It’s easy to think that financial planning is something you’ll only worry about later once you earn more or have dependants. However, the reality is that the habits and structures you put in place in your 20s often determine your long-term financial success. Strong financial planning starts with simple, foundational steps – protection, savings, and basic estate planning. Think of these as your financial safety net, designed to protect you from setbacks so that your long-term goals stay on track. Lana Visser-Galant, a Certified Financial Planner at Fiscal Private Client Services shares a five-point checklist:
1. Medical Aid: Protect Yourself Against the Unexpected
When you’re young and healthy, medical aid can feel unnecessary. But accidents and illnesses don’t wait for “the right time”. Private healthcare costs in South Africa can be extremely high, and even a short hospital stay can create significant financial strain. Medical aid provides essential protection against these costs, ensuring that you have access to quality healthcare without needing to rely on savings or go into debt. If budget is a concern, starting with a basic hospital plan can offer meaningful protection while keeping contributions affordable.
2. Income Protection & Disability Cover: Insure Your Salary
Your income funds your entire life, from your rent and lifestyle to your savings and future goals. So, what happens if you can no longer earn that income? Disability cover is essentially insurance for your salary, replacing a portion of your income if illness or injury prevents you from working. Many people underestimate how financially devastating the loss of an income can be, often because they assume it won’t happen to them. However, your financial future is directly tied to your ability to earn, and even a temporary interruption can have long-term consequences. Understanding any cover provided by your employer, and where the gaps may be, is an important first step.
3. Critical Illness Cover: Financial Support When Life Takes an Unexpected Turn
Serious illnesses such as cancer, heart disease, or stroke don’t just affect your health, they can also place a significant strain on your finances. Critical illness cover provides a lump sum payout upon diagnosis, giving you the financial breathing room you may need during recovery. This can help cover costs not included in medical aid, such as rehabilitation, recovery time off work, or lifestyle adjustments. It serves as an additional layer of protection, ensuring that your long-term financial plans are not derailed during an already challenging period.
4. Emergency Fund: Your First Line of Defence
Life is unpredictable and unexpected expenses are part of the journey, whether it’s a car repair, a medical expense, or a sudden change in employment. An emergency fund acts as your financial buffer, allowing you to navigate these events without relying on credit or disrupting your long-term investments. Ideally, this fund should cover three to six months of essential living expenses, but even starting with a smaller amount can make a meaningful difference. Building this fund over time provides both financial stability and peace of mind.
5. A Basic Will: Not Just for Older People
Many young individuals believe that drafting a Will is something to consider later in life, but if you have any assets, such as a bank account, a car, or personal belongings, you already have an estate. A Will ensures that your assets are distributed according to your wishes, rather than being subject to default legal processes. It also reduces unnecessary stress and delays for your loved ones during an already difficult time. Starting with a simple Will is sufficient, and it can be updated as your circumstances evolve.
Protect First, Then Grow
It is natural to want to focus on building wealth and investing for the future, especially when you begin earning an income. However, a strong financial plan is built on a simple principle: protect first, then grow. Without protection, unexpected events can quickly undo years of financial progress – a medical emergency can deplete savings, and the loss of an income can derail long-term goals. With the right structures in place, however, you create resilience and give yourself the ability to move forward with confidence.
Financial planning in your 20s is not about having everything figured out. It is about putting the right foundations in place early, such as protecting your income, preparing for the unexpected, and creating a financial safety net. These decisions may not feel exciting in the moment, but they are some of the most powerful ones you will make. They ensure that no matter what life brings, you are prepared, protected, and able to continue building the future you want.