Daily, monthly and yearly financial habits

We are what we repeatedly do, and our financial position today is likely to be a reflection of our cumulative spending habits and money decisions.

Although bad financial habits may be difficult to exorcise, implementing a set of daily, monthly and yearly practices can powerfully transform one’s financial situation and set one on the path to financial freedom. Here’s how.

Daily financial habits

Use cash: As trite as the old adage that ‘cash is King’ may sound, paying cash for daily purchases is a powerful way of controlling expenditure. Research has shown that a profound emotional disconnect exists when swiping a credit card or making an online purchase which distances the purchaser from the transaction. The acts of withdrawing cash from a machine and exchanging cash for goods are tangible transactions that require deliberate thought, precision and planning. The financial transaction is experienced by all our senses – even down to the smell of a new bank note – and our engagement in the process is absolute.

Stay educated: Remain financially educated in terms of matters that have the potential to affect you personally. With an independent financial planner on your team, it should not be necessary to keep abreast of all technical and legal intricacies of the broader financial planning industry, but rather to remain an ongoing scholar of personal finance and consumer rights.

Control emotions: If you are invested for the long-term it is easy to become distracted by market noise. Political turmoil, economic turbulence and ‘hot’ investment tips are harbingers of fear and greed – two arch-enemies of sustained investing. Like the ebb and flow of tides, the short-term peaks and troughs of investment markets should be considered peripheral noise. Moving in and out of investment markets as a result of short-term fluctuations is not a strategy but rather a knee-jerk response to what should be considered perfectly normal market behaviour.

Monthly financial habits

Spend less than you earn: Containing your outflows to less than your monetary inflows is the first law of solvency. Spending less than you earn means that you will have a profit margin at the end of each month with which to build wealth and ultimately achieve financial freedom. Remember, it’s not your income that makes you wealthy, it’s your spending habits.

Check your bank statements: You cannot manage what you cannot measure, and good money management begins with tracking one’s bank statements and transactions regularly – a process which is thankfully being made easier by technology. Apps such as 24Seven are easy to set-up and are brilliant for tracking one’s expenditure, creating budgets and analysing spend.

Exercise charitable giving: Whether you are giving of your time, money or resources, make charitable giving a habit. Not only does it make you more aware of the plight and needs of others, the act of giving – rather than the extent of one’s giving – has been proven to make us feel better about ourselves. 

Yearly financial habits

Meet your advisor to review your plan: The frequency with which you meet your financial planner should be at least annually – and more regularly if you are nearing retirement or facing personal circumstances which warrant more frequent meetings. As part of the review process, your financial planner should determine whether any personal or financial changes in the past 12 months impact on your future planning. Seemingly insignificant changes to one’s personal circumstances – such as a change in smoking habits, a salary adjustment or the introduction of group cover – can significantly impact your financial plan and save you money.

Review your medical aid plan option: Although past medical history is no indication of future healthcare spend, it remains imperative to review your medical aid option towards the end of each year. Any new diagnosis or ailment which has the potential to impact on your future healthcare expenses should be considered a trigger for a plan option review, bearing in mind that chronic medication and hospitalisation are the key drivers of medical expenses. In the absence of cover for chronic medication and comprehensive gap cover for hospital events, patients can be left with enormous medical bills that they are unable to pay – forcing them into state facilities for treatment, which is not ideal. Navigating the complexities of the many plan options available and balancing the costs thereof against one’s personal budget can be an intimidating exercise and it is worth consulting a medical aid expert.

Maximise tax efficiency: There are a number of legislated tax deductions that we as taxpayers are entitled to and it makes financial sense to employ them to our benefit. There are legislated tax benefits in respect of retirement funds, insurance cover, tax-free savings accounts, spousal donations, medical expenses and pensioners, to name just a few. A qualified financial planner will be able to guide you through the intricacies of South African tax legislation to ensure you are making full use of all available benefits.

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Gareth Collier

Crue Invest (Pty) Ltd


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