Made some New Year’s resolutions you didn’t get around to implementing in January? All is not lost. February is a good time to start initiating those smart financial moves.

New Year’s resolutions gone bust

South Africans got a nasty shock early in the New Year when the International Monetary Fund (IMF) issued a stern warning to tighten our belts. The IMF went on to predict that the average South African will suffer financially in 2017 after declines in economic growth in 2015 and 2016 and because local population growth exceed economic growth.

Start in February

Fortunately, all is not lost! February is a good time to start initiating those New Year’s resolutions and smart financial moves you didn’t get around to implementing in January. It’s not too late to re-think past spending habits and fiascos and implement the following five smart financial moves.

  1. Become financially literate and do everything you can to increase your financial skills and knowledge. None of us are born with these skills, so get help, read books and blogs, attend workshops or ask a trusted friend or your banker for advice to formulate a financial vision and set achievable goals.
  2. Create a budget (spending plan). Track and plan your spending and reduce and set limits on expenses that prevent you from achieving your goals. If you don’t know how to do this, ask for help or go online where you can even find budget setting apps to use. Once you have a proper budget, add 10% to all your essential bills like groceries, electricity and petrol, the things we have been warned will be more expensive in 2017.
  3. Work towards becoming debt free. One of the smartest moves you can make in 2017 is to break the cycle of debt you may be in. Start by paying off any high-interest credit card debt you may have. Determine not to make any new debt and to use cash wherever possible. Pay your accounts on time and never pay less than the minimum instalment. Paying more will save interest costs. Interest rate hikes are definitely coming, so you may as well increase the repayments on your prime-linked interest rate debts such as your home loan and car finance now.
  4. Start saving. When drawing up your budget, set aside money to build an emergency savings fund equal to at least three months’ living expenses. This may take time but do it in any case, even if you can only save a small amount each month. To increase your savings you may need to generate extra cash, work overtime, sell some stuff or just give up some things and live below your means, for a season. If you don’t, you will have to revert to making new debt every time an emergency strikes.
  5. Plan for the future. Join your employer-sponsored retirement plan or invest in your own annuity or individual retirement account if you are self-employed. Contact your human resources or benefits department for more information or ask your bank or a financial planner for help.

 

Sources

Brown, J. 2016. We will be poorer in 2017. Retrieved from: http://www.fin24.com/Economy/we-will-be-poorer-in-2017-20161216
Hannah, S. Five smart money moves for 2017. Retrieved from: http://theprovince.com/opinion/columnists/5-smart-money-moves-for-2017
Why SA consumers are in for a rough ride in 2017. Retrieved from: http://www.fin24.com/Economy/why-sa-consumers-are-in-for-a-rough-ride-in-2017-20161230#cxrecs_s