Many people make new year resolutions as a way of trying to improve their lifestyles by setting up new goals for the year ahead. However, few people achieve their objectives.
It is surprising that as many people make these resolutions, including getting into good physical shape, very few think about getting their personal finances back into shape – and that this could benefit them.
Head of financial education at the Old Mutual John Manyike said: “As in the past years, thousands of South Africans will emerge from fun-filled festive seasons into 2023 knowing that their finances will be tough in January, and the rest of the year, and they will
probably not get any better.
“The irony is that if we were disciplined, and wrote on paper financial resolutions that stuck, we could get our finances into shape for years to come.
“The key to changing bad money habits and becoming financially strong depends on knowing the right way to preserve and grow your money. The time for change is now,” he said.
“The better you do, the better your future will be, Manyike said.”
Here are the 10 steps needed to improve long-term financial health, according to Manyike:
Knowing what you owe – Getting financially fit can’t begin until you know what your debts are. Listing loans, credit card debt, account balances and other debts is the step to identify how big the job ahead will be.
Stopping all unnecessary spending and accounts – Once you know what you owe, you should stop spending on items you do not need.
Paying off debts – Attack debts by paying off those with high interest first (some stores charge as much as 21% interest on accounts). As these are paid off, the money used to settle these accounts can then be allocated to paying off lower-interest debts.
Consolidating your debts – Consolidating debt in a single account means simplifying payments. In addition, as debts will be paid off and pooled to form a single debt, interest costs will be reduced. This means that the size of the overall debt could also be reduced if you negotiate
lower settlement amounts.
Downscaling your lifestyle – Changing financial habits will involve taking tough decisions. However, deciding to keep your car for another year, cutting back on restaurant visits and reducing spending on luxury items will have immediate benefits.
Seeing bonuses in a different light – Any bonus or gift you receive will work for you if it pays off accounts or kick-starts a savings plan.
Becoming a poly-jobber – More people are using their skills to create second incomes.
Not panicking – You could damage your future security by cancelling life and insurance policies or liquidating savings or investments.
Becoming a saver – Developing a new personal budget will ensure that more money can be paid into accounts. You will then have funds for emergencies and short-medium-and long-term savings plans.
Getting expert financial advice – A personal financial adviser will assist you by reviewing your budget and developing strategies to help you meet your financial goals.
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