Commit to making yourself richer in 2015 with these top 10 financial resolutions. By Lisa Templeton
‘Subconsciously, we sabotage ourselves by not quite believing we deserve money,’ says Debbie Netto-Jonker, certified financial advisor and partner at Netto Invest. ‘Or, we see the saving of money as impossible and hopeless and therefore never really try. But if you have a plan that’s well thought out, structured and written down, it is amazing what you can accomplish.’
What you need are resolutions and the will to stick to them. And while other resolutions, such as giving up chocolate or smoking, mean losing something, with this you’ll gain, and it won’t be weight!
1. Write up my financial goals for life
‘When we can see, taste and dream about what we are saving for, it gives you the motivation to plan for it,’ says Debbie. You may wish to pay off credit card debt, save to send a child (or yourself) to university, buy a home or pay off a home loan, retire aged 65 or travel once a year. Whatever it is, write it down and you’re already committed to it.
2. Come up with a plan to make them happen
‘To make your goals come true, you need to answer detailed questions, for example: “How will I make this happen?”, “How much should I put aside?”, “By when will I do this?”
Give yourself a very clear-cut plan to work to,’ says Debbie. Sounds complicated? It isn’t. As Madiba once said, ‘Everything is impossible until you have done it.’ Debbie suggests that if you need help, talk to someone you trust, or consult a certified financial planner.
3. Change my thinking
‘Say to yourself: “I am now going to commit to saving by paying myself first”,’ says Debbie. Don’t see a plan to save as some horrible scheme to deny yourself lovely things. Instead, tell yourself you will pay yourself first, and then you will have some more money to spend. Come up with an amount to save, say five or 10% of your pay cheque, and put it right into your savings, or into unit trusts, perhaps. If you don’t do it at the beginning of the month, you know it will have gone by the end of it.
4. Spend less and save more
Here’s something you may not know about rich people – most of them don’t like to spend. That is just what makes them rich. Make a conscious commitment to yourself to spend less and to sometimes do without. If you’re considering getting takeaways on a Friday night, opt to toss a baked potato in the oven instead. Those shoes you really, really want to buy? Sleep on it. They may not seem so irresistible in two days’ time. The self-respect you’ll get from saving will soon outweigh the quick thrill of buying.
5. Start a budget
A budget means you write down everything you spend – that’s right, everything. It doesn’t take long if you make a record each time you spend, but when you write down what you spend, it has two effects: firstly, you realise exactly how much you spend – and how much you waste – and secondly, you become accountable to yourself. You will stop and think before you spend.
6. Prioritise my debts and pay them off
Most of us are in debt. According to National Credit Rating figures, only 52.5% of consumers are in good standing, which means that almost half of SA’s credit-active consumers are in arrears by three or more months on at least one account. And debt costs money, because the interest mounts up. But not all debt is created equal; work out which debt is costing you the most and set aside a fixed and realistic amount a month to pay it off.
7. Make sure I will be alright when I retire
This is something you really need to think about, because it’s the best investment you can make. It takes discipline and the earlier you start, the better. A rule of thumb is to set aside at least half your age, as a percentage of your salary. So if you are 30, set aside 15%, and if you are 40, set aside 20%. Chat to a certified financial advisor for more advice about retirement vehicles such as pensions and retirement annuities.
8. Make sure I am well covered by medical aid, and life and disability cover
‘Studies show that most people in SA are underinsured,’ says Debbie. ‘Remember to cover your most valuable asset, your income-earning ability.’ You will need insurance to balance any shortfall in money – should something happen to you. And if you’re not on medical aid, you should aim to join one as soon as possible. Medical expenses can become astronomical should you need medical care. Remember, if you haven’t joined a medical aid plan before you are 35 years old, a penalty will be applied to your monthly premium.
9. Check my will – or actually get around to writing it!
This may not make you richer, but a new year is a good chance to make sure you’re happy with your will and that it’s up to date, says Debbie. In the UK, it’s gauged that 60% of people fail to get round to writing up a will. Of course, no one wants to think about dying, but it’s very important, especially if you have dependents. And knowing that they will be provided for is a great weight off your mind.
10. Have an emergency fund
This always seems like a luxury you cannot afford, but find a savings vehicle and set yourself a month-by-month target so that you can ultimately land up with three to six months’ worth of salary set aside for emergencies. It’s well worth it for peace of mind and invaluable in crunch times.
Make it happen!
Remind yourself you are worth saving for. Write yourself a note that reads ‘I deserve to have money’, and paste it in your diary or on the mirror in your cupboard. Remember, it’s not what you make, but what you keep.