On New Year’s eve, particularly after a few drinks, we make promises to ourselves that we have every intention of sticking to. But, time and again, and just a few short weeks later, they’re forgotten, particularly when it comes to our finances.
Kosie Jansen van Rensburg, co-founder of life insurance company Hero Life, says: “Most people aim to get on top of their finances or save more at the beginning of the year, but, come February, and well-intentioned resolutions have been long forgotten.“There are practical ways, however, that you can see your goals through and end the year feeling financially fitter, and with your resolutions ticked off,” he says.
Angelique Ruzicka looks at some practical advice that will stick.
1. PROMISE THAT YOU’LL BUDGET
Warren Buffett, one of the richest people in the world, said the following: “Do not save what is left after spending. Instead, spend what is left after saving.”
We’re not talking a huge amount here – it needs to be an affordable amount. But after we’ve paid our creditors, we’re less inclined to save, so the advice these days is to “pay yourself first”.
Jansen van Rensburg says: “Budgeting also removes financial anxieties because you know exactly how much money is coming in and how much is going out, and also where the money is going to. By being in control of your money, you are more in control of your life.”
2. SAY YOU’LL GET A GRIP ON YOUR DEBT
Debt is one of the hardest things to cope with, but dealing with it is a worthwhile pledge to make.
Wealth coach and author Tanya Haffern says: “Understand exactly what you owe and design a plan to pay it off as quickly as possible.
“Start with the debt with the highest interest rate because that is costing you the most every month. Once that is paid, move on to the next debt and so on until you have settled all your debt.”
3.TAKE CARE OF YOUR LOVED ONES
Review your will. This is particularly important if your circumstances have changed.
If you’ve recently got married, had a child or taken out a home loan, you need to reassess your finances and decide who you want to leave your wealth to. If you don’t have the money to get a professional to look at it, find out when National Wills Week is next year – it generally falls in September – and mark it on your calendar so you can consult an expert for free.
Jansen van Rensburg says: “Also check your life insurance – do you have enough cover? Have your circumstances changed and do you need to adjust your house and car insurance, as well as medical aid? Adjust these if necessary.”
4. PLEDGE TO KEEP EXPENSES DOWN
Things have gotten expensive, but cutting back is one of the easiest financial resolutions you can make.
Jansen van Rensburg says: “If this sounds like too much work, there are a number of useful apps that will streamline this for you – look at your banking app, for example, as this will be integrated with your account for easy monitoring.
“An app will also give you a nudge on where to cut spending and where to save.”
5. UP YOUR FINANCIAL KNOWLEDGE
If you’ve always been ignorant about your finances and how to improve them, promise yourself that next year will be a year where you educate yourself.
Haffern says: “Read a financial book every quarter. The more you learn, the more you earn. Make sure you invest in your education and grow your skill set. You need to know exactly how to make your hard-earned money grow, and education will unlock that potential in your mind.”
6. PROMISE TO REDUCE YOUR BOND
A home loan is probably one of the biggest debts we have and reducing it will lead to huge savings in the future. Again, be realistic about what extra money you can put into your bond. If you aim too high, you could struggle, get despondent and then give up.
Elmarie Bester, principal at Leapfrog Property Group Faerie Glen, says: “The faster you pay off your bond, the sooner you own that asset, and that will enable you to leverage your income to diversify your property portfolio by acquiring more, or to build up an emergency fund in your bond account. As little as R500 a month extra could shorten your bond period by a couple of years.”
7. PROMISE TO MAINTAIN ASSETS
It’s important to service your car, particularly if it’s your prime mode of transport. If you don’t service it regularly, it’s bound to cost more in the long run. However, not only cars need maintaining, but properties too. Property maintenance has a direct impact on property value and growth, says Bester.
“A well-maintained property always fetches a higher price on the market because of its appealing presence.”
Maintain and fix things when they break – replace old or outdated fittings, paint the interior and exterior every couple of years, look after the garden, and make sure the plumbing and electrics are in working order.
“Property maintenance becomes easier and more ‘natural’ when you adopt a house-proud mind-set. Tell yourself that the little things become the deciding factors on value later on,” Bester says.