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Out of Aces? Game pointers to be learnt from Boris Becker’s bankruptcy

Out of Aces? Game pointers to be learnt from Boris Becker’s bankruptcy

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Renowned Wimbledon star Boris Becker made headlines recently when he was declared bankrupt. To a generation of tennis fans, he will always be remembered as the explosive German that won the men’s singles title at Wimbledon three times – the first in 1985 when he was only 17 years-old, and again in 1986 and 1989. Becker was once estimated to be worth around £100 million, earning over £25 million from match winnings alone.

It’s reported that an extravagant lifestyle combined with poor financial management swiftly eroded his fortunes. Clearly, the practice of good financial management is important for every person. We asked our lecturers from the School of Financial Planning and Insurance (FP&I) for their insights.

Karin Muller says Becker’s bankruptcy underlines the importance of a financial plan and that everyone needs to have a monthly budget. “This makes you consider not only how much you are earning and spending, but what you are spending your money on. This helps us realise that ill-advised spending is not sustainable in the long run.”

Pietro Odendaal says it is important to diversify your assets and overall portfolio. “The media suggests that Becker invested a large portion of his wealth in a single company which contributed greatly to his cash woes. A well-diversified portfolio needs to consist of a healthy mix of a variety of assets including cash, bond, property, equity and offshore interest. Being over-exposed to any of these has its risks. These must be clearly understood and always be kept in mind.”

Michelle Swanepoel, FP&I head of department says seeking professional advice is crucial. “One can have exceptional skills in a particular field but that does not necessarily translate to financial acumen in dealing with difficult aspects such as retirement planning, managing and choosing investments and optimising wealth. Financial advisers are trained in these specific aspects and can make a huge difference.”

Gerrie van der Merwe warns that to avoid exposing yourself to unnecessary financial risk, it’s advisable not to spend more than 30% of your after tax salary on debt. South Africans on average spend about 70% of their after tax salary on debt repayments. He also warns against funding your lifestyle on credit and advises people to live within their means.

Becker’s story has given impetus to the importance of saving. Tyrone Ford highlights that financial management does not have to be a major undertaking, but should be started as early as possible and done consistently. He says sticking to your monthly budget targets can help in developing a culture of saving and a lifelong healthy financial habit.

Marilize Putter, Dean of the School of Financial Planning and Insurance, says these financial planning principles are inculcated in Milpark Education’s students and they are able to apply them to their daily lives. “The principles taught demonstrate the value of an education in financial planning and through the further sharing of such knowledge with their clients, our students are able to make a solid contribution to the financial literacy of their communities. In so doing, the future Boris Beckers of our country are sure to be much better prepared in the management of their finances.” 

31 Jul 2017