It’s June, so we’re halfway through the year. Your New Year’s resolution financial goals may seem a far way off, but have you managed to stick with them at all? Are your savings where you want them to be? Have you reduced your debt? If you have veered off from your financial goals that you promised you would adhere to at the beginning of the year, it’s not too late to get back on track. Angelique Ruzicka tells you how
PUT A NEW SAVINGS PLAN IN PLACE
If you haven’t saved at all since the beginning of the year, there’s no doubt you’ve lost a lot of ground. Hayley Parry, facilitator of 1Life’s Truth About Money initiative, explains that if you’d pledged to save 10% of your monthly salary, you’d have a healthy savings balance by now.
“If you earn R12 500, and have been putting away R1 250 in your savings from January to May 2018, you should have accumulated R6 250 in savings,” she says.
But it’s not the end of the world if you haven’t met this goal. Perhaps your savings goals were too ambitious?
Or perhaps you were thrown off course by the VAT increase earlier this year, which few predicted would happen.
“You need to be realistic about how much money you can put away every month towards this goal, as you don’t want to have to keep dipping into this savings account to cover day to day expenses – which defeats the purpose of saving,” says Parry.
She recommends putting together a full budget that takes account of total living expenses, accumulated debt and investments, to ensure all expenses are added correctly.
“Once this has been done, you’ll have an amount left that you can allocate towards ad hoc monthly expenses, as well as savings. From here, start saving – even if it’s a small amount,” says Parry.
If failing to save was down to a discipline issue, then you need to put a debit order in place that will pay into your savings.
If you rely simply on your own willpower and manual transfers near the end of every month, there’s a good chance that you may be tempted to spend the money on something else.
EVALUATE WHY YOU’RE NOT PAYING BACK YOUR DEBT
Most of the time, people who stop paying off their debt do so for one of two reasons: they are not able to see the end result of being debt free, or they have no emergency fund in place. Or both,” says Parry.
She recommends finding out how long you have to go until your debt is paid off and putting a small amount of savings into an emergency fund on a monthly basis, in case you need the money for an unforeseen event. This should also help to prevent you from dipping into money that is allocated for your debt repayments.
It’s important to establish a repayment plan that works for you. Parry suggests speaking to your lenders to create a realistic plan or, if that fails, seeking the assistance of a debt counsellor.
FACTOR IN PRICE HIKES THAT MAY HAPPEN
Food and petrol prices will no doubt increase during the year. Taking advantage of mid-season sales can help to reduce the cost of your grocery basket. “Buy in bulk now if you can afford it and if you have storage. Bulk on things that don’t go off, such as washing powder and toilet paper,” says Rita Cool, financial planning consultant at Alexander Forbes.
“Building material prices tend to increase every six months. If you are doing building alterations, try and lock in pricing now,” says Cool.
PLAN FOR THE FESTIVE SEASON – NOW!
Christmas may feel like a long way off but it shouldn’t come as a surprise because it happens on the same date every year. Yet thousands of consumers are put into a financial spin during the festive season and the whole cycle of debt starts again.
“Consumers should start putting a little bit of extra money away now for those festive season gifts and family trips – if they’re not doing so already – to ensure December doesn’t become a season of debt,” says Parry.
Alternatively, save yourself the Christmas rush (and crush) and buy your presents now. “Companies are having sales all the time right now because the economy is rather tight. Buy Christmas gifts on sale six months in advance as prices will go up the closer you get to Christmas,” says Cool.
SAVE FOR YOUR YEAR END HOLIDAY
If you need an incentive to get back on track with your savings, then this could be it.
If you budget for it, you could pay your holiday off with one payment and not have to worry about paying it off through a loan in 2019, thus neglecting your savings goals.
“Six months’ worth of saving will get you a decent break. Make your bookings now to get a good deal, and buy your aeroplane tickets as well, as they’ll be cheaper and there will be more availability,” adds Cool.