We thought we were belt-tightening.
But then inflation came and snatched our belts – along with our pants!
South African consumers are stretched thin by the country’s rising cost of living.
Life’s never been more expensive.
But the start of a new season promises happy, new beginnings as well as healthy, new habits.
With September traditionally being a time to clean out, refresh and renew, the ninth month of the year is a good reminder to review your budget and put plans in place to help your finances flourish. Here's how to show your money who is in control.
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For anyone who wants to take full control of their money journey and life goals, tracking your spend is one of the most important things to do, financial experts tell Drum.
If you can master spend-tracking, the battle is half-won.
Christian Hugo, Solution Strategist at FNB Integrated Advice shares a few steps you can take to make sure that you can still enjoy life whilst making necessary financial sacrifices.
"If you can track your spend, this will be a great way to see where your money is going and to draw attention to any possible unconscious spending. It will also show you your main spending categories. Use a mobile app or a pen and piece of paper to record this," he says.
Start by checking your budget, Christian suggests.
"Now that you have a general idea of where your money is going, the next step is to create your budget. At this point, you should consider your priorities and determine whether your spending reflects those priorities."
You can perform the following actions in this step, he recommends:
• Think, dream, and reflect
Consider your financial lifestyle over the next five, 10, or 15 years. List all the things that are important to you. This could be your retirement, the education of your children, or having no debt.
• Select your top 3
Go through the list you created in the first step and select the top three items.
• Produce your own receipts
This step is the difficult one, this is where you look at where your spending is going using an app or your paper notes, and if that aligns to what is important to you.
For example, if being debt free is important to you but you are spending lots of money on takeaways, maybe you can reduce the amount that you are spending on takeaways each month and rather use this money to pay off your debt quicker.
Once you have made that decision, action it! Make sure that you set up a scheduled transfer to pay of your debt as soon as possible. This will reduce the temptation to spend as much on the items that you have traded off on.
• Review
The last step is to review this on a regular basis. Do the 4-step process on a regular process to ensure that your spending is aligned to what is important to you.
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For a quick financial spring clean, consumer finance website Just Money offers some helpful tips to assist you with this process, and get your financial affairs in order. Use this as a guide.
- Review your budgeting goals
Review your bank statements to see where your money goes. Cutting extraneous spending can free up cash, enabling you to reduce your debt and reach your financial goals.
- Organise paperwork
Documents left lying around are likely to get lost. File important documents and shred records you no longer require.
- Examine your policies
Are your insurance policies still relevant to your needs? Your circumstances may have changed in the past few years, particularly in the aftermath of the Covid-19 pandemic.
- Seek expert advice
A reputable financial adviser can help you to review your policies, and advise you of the financial implications of any changes you are considering.
- Check investment performance
Are you receiving optimal returns, paying fair management fees, and adopting the appropriate risk profile for your life stage? For example, a middle-aged manager would generally require a more conservative investment portfolio, while a young professional may be less risk-averse.
- Make the most of your medical aid
Ensure that you make the most of any benefits, such as free health checks, and savings at affiliated companies. Check that you are on the appropriate tier for your needs. Consider gap cover to prevent major shortfall expenses.
- Check your credit score
Your credit score is used by lenders use to assess your risk profile, and determine the interest rate you should be charged. It’s important to know your score and work to improve it if necessary.
- Take a debt inventory
Get a clear picture of what you owe, and the interest rates charged for each amount. Work towards paying off the debt that charges the highest interest rate, such as credit cards.
If you are struggling to pay off debt, contact a reputable debt counselling company to assess your situation.
- Update your will
Your circumstances may have changed since you last drew up your will. Ensure it’s up to date and reflects your wishes. If you don’t have a will, draw one up as soon as possible.
