Use the new year as a chance to improve your financial health by adopting some resolutions around your finances. We’d all like to be healthier and wealthier, so cutting back on unnecessary expenses and saving or investing more are goals we should all be aiming for.
Here are some steps on how to relook your finances:
1. Start the year with the end in mind.
Decide what you want to achieve personally, physically and financially in 2020 and set daily, weekly and monthly goals aimed at your end goals.
2. Make a smart investment
A book can be the most entertaining investment you make. Pick up one of the several great books available from local authors packed with great financial advice, tips, and tricks for South Africans and enjoy some holiday reading with a purpose.
3. Have “the talk”
Financial problems can cause stress for you and your loved ones. Make time to discuss your financial situation, fears, and hopes and get everyone in your family with you on the journey to financial freedom.
4. A goal without a plan is just a wish
Set up a budget to serve as the plan on how you are going to spend and save your money. A budget is a great way to keep track of your expenses and determine how much you have for expenses, savings and discretionary spending.
5. Check your credit score
Once a year you can check your credit score online for free. See how creditworthy you are and look for ways to improve your credit score. A better credit score helps you get lower interest rates on loans.
6. Inspect your insurance
With another year gone, you and your assets are a little older. Review your short term insurance to make sure you are not overpaying based on last year’s asset values and adjust your risk cover policies to make sure you are sufficiently covered against life’s surprises.
7. Reward yourself
Reward programmes are an easy way to get “free money” from savings on purchases and free goodies for positive behaviour. Just double-check that the price you pay for the reward programme does not exceed the benefits you receive.
8. Compare your fees
Request, confirm and review your banking and investment fees to make sure you are getting the most value for money.
9. Schedule a meeting with your financial planner
Meet with your financial planner to go over your investments, update him or her on what has changed in your life – marriages, birth of a child or death of a spouse – and ensure your current investment plans are still in line with your financial goals.
10. Don’t forget about your tax-free savings account
You have until February 29 to invest up to R33 000 into your tax-free savings account for the current tax year. Don’t miss out on this opportunity as once it has passed, the opportunity to use this investment vehicle in the tax year is gone.
If saving is not already a habit make 2020 the year you go from being a spender to a saver. Just start by spending less and saving more – it is always good to put money away at the beginning of the month rather than at the end when you’ve spent it.
12. Shop online
Get the most bang for your buck by using the internet to shop around for the lowest prices, saving you time and money.
13. Review your investments
Review and rebalance your investments according to personal and economic changes and make sure your investments are still suitable for your investor risk profile and investment goals.
14. Make 2020 the year you become debt-free.
Calculate your total debt and decide how and by when you are going to pay it off. Start working towards eliminating your debt by paying as much as you can on the debt with the highest interest rate.
15. Update your will
If you don’t have a will you need to create one as soon as possible. If you have a will you should review it to make sure it contains your current wishes. Don’t forget to update your beneficiaries on retirement funds and life policies as these are not covered by your will.
16. Increase your value
An easy way to increase your value and save some money is to learn a new skill. Learn to cut hair, build a website or become a public speaker. All these skills can increase your value and your potential earning power and help you save some money.
17. Use the six month rule
We all have electronics and furniture or even clothes we no longer use. If you have not used the items in the last 6 months, go online and sell it. You will be surprised by what people will pay for your preloved stuff.
18. Spend less and save more
Audit your bank statement to eliminate all those unnecessary expenses for stuff you don’t use or need, like the good-intentioned gym membership or the book subscription from a previous hobby.
19. Be your boss
Find a second or even third income stream. Like to bake? Sell muffins to your colleagues. Good at playing golf? Become a golf coach. A side hustle is a great way to increase your income and meet new people.
20. Fill up your piggy bank
Collect all the loose change you receive through the year in a piggy bank. At the end of the year use the savings to reward yourself – or even better do something good for someone else.
Jaco Prinsloo is a Certified Financial Planner at Alexander Forbes