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9 ways to spring clean your finances

Money-saving tips to get your rands and cents to go further.

With all the twists, shifts and turns the economy has taken this year, it certainly hasn’t been easy-going for cash-strapped South Africans. Now that we’ve kissed the winter blues goodbye, it’s time to welcome the warmer season with open arms and there’s no better way to do it than with a spring clean… of your finances! 

“Take this opportunity to get organised. The more organised you are, the more in control you are. You want to be in control of your finances – not the other way around,” says John Manyike, head of Financial Education at Old Mutual.

While it sounds easy in theory, in practice there are often unexpected curveballs that can throw even the most prudent of budgeters off the straight and narrow.

“Changes in both the economy and your personal life affect your budget, which is why it should be revisited on a regular basis,” says Budget Insurance’s Susan Steward.

In September, petrol prices are expected to rise by 59 cents a litre and diesel by 56 cents a litre. Electricity tariffs are expected to increase by more than 20%. And as August stats indicate, South African consumers remain under tremendous pressure to clear debt.

Preliminary statistics from Stats SA reveal that there have been 48 169 civil summonses issued for debt in June, valued at more than R350 million.

Here are a few guidelines from the experts on how to balance our budgets between September’s petrol hikes and increasing consumer debt and living costs.

1.First things first: get rid of debt

Make sure to pay off the most expensive debt first. “This is the debt that carries the highest interest rate and is costing you the most. For example, if you have a bond at a 10% interest rate and a personal loan at a 20% interest rate, consider paying off the loan first,” says Manyike.

Winter shopping splurges on credit may have accumulated, but if you received an annual increase in July, you may have a little more in your bank account and – as much as it can be tough – use it smartly by paying off outstanding debt, Steward advises, or strategise a smart budget plan to make the necessary payments.

2. Cut costs

This isn’t about scrutinising every cent you spend but rather establishing spending patterns to identify possible areas for saving. A good way to do this is to look at your monthly bank statement and see where most of money is going. You may be surprised at just how much you’re spending in certain areas and how by making small changes you could keep your spending in check.

3. Less is more

Examine your monthly budget and if your expenses exceed your income, cut out things you can do without. Just like cleaning out your closet or selling old equipment that is taking up unnecessary space, try to eliminate all expenses and purchases that are not essential. Be very clear on the difference between needs and wants.

4. Remember your saving goals

If you didn’t stick to your New Year’s resolution to save more money this year, it’s not too late to start now. Make a plan to set up a monthly debit order to an investment account or open a tax-free savings account, increase your pension fund contribution and request the 13th cheque option from your employer, if available to you.

5. Save for the unexpected

The amount you save towards an emergency fund depends on your personal circumstances. Ideally an emergency fund should cover three to six months’ living expenses, says Steward, adding that while this might seem like an insurmountable amount to save, just by putting aside R250 a week, for example, you have yourself R1 000 at the end of each month.

“If you don’t have savings, you aren’t getting ready for the day when you must pay out more money than you have. This day can come in the form of an unexpected medical bill, or family emergency, and it is at times like these that your savings can save you,” Manyike points out. 

6. Track your spending

Try establish where unnecessary spending goes and how you can reduce it by making small changes to save big. Keep track of expenses in your statements and find a pattern to re-strategise saving methods.

7. Outdated fees must be phased out

You could be paying subscription fees for magazines you don’t read, a gym you don’t go to or paying for a bank account you no longer use. End subscriptions and use the money in more efficient places.

8. Payments that don’t reap rewards

Always read the fine print or terms and conditions when it comes to gaining loyalty points from reward programmes. Falling for a quick programme can have you overspending for smaller returns. Sometimes it’s just not worth it.

Read: Commandments of a Cheapskate 4

9. Know the money lingo

Research, read and seek advice on the best methods to save your money and make it go further for longer. Understanding investments, pension funds and the best account to save and spend your rand can certainly take you a long way.

COMMENTS   18

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1st get rid of debt–Sounds nice but people who are living off debt, how do they do that?
2nd You need life cover BUT your payment should not go up as the cover stays the same
3 Who has expensive collectables? People are paying 76% of their take home pay on debt.
4 Pay off your bond you are probably saving at less than inflation (9%) which means you are losing NOT SAVING
I will stop here with this nonsense article. It’s all sounds good feels good but has no relationship to reality.
People have food, rates, water, school fees, cell phone bills, insurances, security, clothes, not to mention children. You need Financial Fitness !!!!

Well then, give us your 9 or whatever steps to financial fitness?

You could attend our course if you would like. 🙂 There are 2 ways to gain knowledge, the hard way (as most people do) or the easy way!! Call our offices ask for Joe

All these points can simply be obviated by creating a month by month expenditure versus budget spreadsheet. Why these hack push setting aside emergency funds is silly especially when they dictate 3 months earnings – what emergencies. Life insurance is worthless your premiums always go up faster than the amount insured, rather join your companies group life scheme and buy ETF
This article is probably compiled by some or other avarice insurance snake oil salesperson

Your cars (mines out of warranty) engine having serious issues, all costs not covered by medical aid, your washing machine breaking. Do you cover such unexpected expenses with debt or savings grahamcr?

1st Quit using the credit cards! This is the problem most house holds have! STOP ! When I review peoples’ finance this is always a main problem
2nd You are paying HUGE amounts in interest on your bond and the first 5 years is almost ALL interest. On a R 1 million bond your payment is about R 10,000 a month. Now some broker wants to sell you an education policy or retirement annuity, and they can PROVE you need it. Well you are paying R 10,000 A MONTH in interest (for 5 years.) Has anyone made R 10,000 a month in interest on their savings?????
3rd Lower your car insurance premiums. But first get a couple different quotes because “they” have a good argument when you want to reduce it. Getting a few quotes shows you and gives you ammunition for them to “just do it.”
3rd Buy a more economical car. By that I mean a 700K car is a R 15,927 payment PER MONTH for 5 years. A 300K car has a payment of R 6,825. That alone saved you R 9,102 PER MONTH FOR 5 YEARS! What could a family use R 9,000 a month for?
4th STAY AWAY from Balloon payments. You probably will not have a car worth the balloon payment ?? NOW WHAT?? It will wipe you out and all you received was a 6 YES SIX year car loan. Now what happens when you have children over the next 6 years.Your finances are depleted and you have this nice EXPLODING balloon you purchased 6 years ago. You are done!
5th Pay off your smaller debt and roll into the larger. The smaller debts, keep us from paying more on the larger debt.You could get a 156% return by paying your bond within 7 years and YES we teach this and YES they do it!!!!!! NO bond payment in 7 years NOW what do you do with that payment YOU DON’T HAVE ANYMORE?? Enjoy !!!!
Now is you want more join the course and get Financial Fitness.

Out of savings which in nowhere near what this article advocates in terms of savings

Credit cards are great if you have discipline – interest free loans for 30+ days. I currently get 1.5% back in cash rewards and I always pay off the card in full at the end of the month. The card and rewards program has zero fees – so the cash reward is practically free money.

10. Educate yourself about personal finance and investing and get rid of your financial advisor/sales person.

if you have debt on your credit card deposit your entire salary into the credit card thereafter during the month buy everything with the card. pay your lights etc with the card. the gradual drawdown on the money deposited will help reduce the interest charge on the card debt.keep tabs on the deposit and the expenses paid against the deposit try to ensure that a little more is deposited than paid.download the loan amortization calculator and see what a few rand a month extra paid against the debt does in hastening the end of the debt

Doesn’t work !! This gets people reliant on their credit card where a swipe and a smile puts you into serious financial difficulties. I ask people how many of you pay your credit cards IN FULL every month.The answer is less than 5% So you are helping create this monster.

P.S. you forgot all the little incidental charges that occur monthly.

The first step is to cut up all your credit cards.

I agree BUT keep one as if you need a car rental (accident) you may not have enough funds to cover the damage waiver amount.THERE’S ALWAYS SOME EMERGENCY THAT NEEDS TO BE ACCOUNTED FOR AND WITHOUT THE AVAILABILITY OF CREDIT COULD DEFINITELY SET YOU BACK YEARS.
BUT YES CUT UP YOUR CREDIT CARDS !!!!!!!!!!!!!!!!!!!!!!!

That’s why you need an emergency fund of 3 to 6 months of expenses, to cover emergencies. Cash in a savings account is more useful in an emergency than a credit card. Plus, your savings account pays you interest, the credit card costs you interest.

Springclean … Bah!

There’s nothing left to spring clean.

Spring clean this!!!

I migrated to a zero tax country…
I paid ALL my debts, including mortgage and car note over five years ago… As long as this car is still reliable and solid, I’m not buying another one.
I only use and spend what I own.
I ensure that I retain/keep more than I spend.
I stopped using my credit cards twelve years ago.
…plus …
I set absolute targets, when a stock or bond has yielded the target set BY ME (not the broker) … I sell, cash out, realise the gain/ profit, and it is real, and refuse to participate in the illusion of wealth by associating market cap with value … it means 100% of zero until it is cashed out…. plus until it is cashed out, it makes me ZERO money, it does however make the stock and bond broker money in fees and tickets every month.

10. Figure out why you want to go through all the hassle to become financially fit. For me it is to retire early.

@Moneychief…what age = early retirement?

40

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