It’s a new season, and a good opportunity to hit the reset button on your financial health.
Spring-cleaning your finances is about taking control and getting organised – and that begins with a plan.
“This spring you need to have a fresh approach to your money,” says Palesa Tlholwe, a Liberty financial advisor. “The best way to start this process is by taking the time to do a financial spring clean. Get your finances in check by getting organised – the sooner you start, the sooner you can enjoy the benefits.”
But you can formulate a plan only once you have a clear idea of where you stand, and your road to financial fitness begins with reviewing your financial statements.
Workout 1: Unpack your statements
Gather all of your latest financial documents including your bank accounts, investments, credit card statements, insurance policies as well as retirement savings.
Alicia Vermeulen, social media co-ordinator at debt counselling firm Zeeva, suggests you categorise your spending into necessary purchases (staples such as groceries, water and electricity), non-essentials and impulse purchases.
“After you have separated your purchases, you will be able to tell where your financial problem areas are,” she says.
Workout 2: Set financial goals
The key to setting financial goals is to be realistic with your expectations.
Begin with smaller, monthly goals that are more attainable, like paying off your retail account debt. But also set out bigger, long-term goals like saving for an international holiday which you can work towards once you’ve settled some of your smaller debt.
Workout 3: Diversify your financial routine
“We all know that when you do the same exercise routine every day, it will eventually stop working,” Vermeulen warns.
“The same applies to your finances. You need to spread your investments and savings across various platforms and methods to not only reduce your risk but to also reap greater long-term rewards.”
Workout 4: Avoid investment crazes
Households across the world have lost life savings and significant amounts of money by investing in overnight “get rich schemes” and popular investment schemes of the day.
If you’re not an investment fundi, it’s ill-advised to be making investment decisions without consulting with a financial advisor.
“Try to avoid financial fads and increased risk by opting for proven investment or savings methods, but if you’d like to try the latest trend, be sure to speak to an advisor and fully understand the risks involved,” advises Vermeulen.
Workout 5: Have a financial spotter
A financial spotter is someone who you have identified to oversee your finances in the event of an emergency.
Vermeulen advises that you create an “in case of emergency” file that clearly sets out your financial position, along with the supporting documentation.
“Your ‘in case of emergency’ folder will give you some peace of mind and will not only benefit you in an emergency situation, but will also provide you with a clear picture of your finances,” she says.
Contained in the file should be: details of the person responsible for your finances during an emergency, a list of all your accounts, the account numbers, balances and monthly payments. The file should also contain the login details and passwords for your online financial platforms.