Use 2020 to get back to financial sobriety
New Year’s Eve often comes with resolutions on health, but your pocket will thank you if you commit to financial fitness as well.
The economic outlook may be dim, but yours does not have to be. We consulted some experts on how to end next year in a better financial position.
Avoid debt as much as possible, but debt can also be used in responsible ways, such as taking a loan to start your own business or to buy a home.
But many consumers go into debt for daily expenses by using store cards and micro loans, which can plunge you into a cycle of debt.
Silindile Ngubo, a fund accountant at Cannon Asset Managers, said she learnt from her mom’s overspending how not to live beyond her means.
“My mother built up all sorts of debt through store cards and loans. She was living beyond her means. We eventually ended up losing our home. I vowed from that moment on to be cautious with debt,” Ngubo wrote.
If you’re entering 2020 with short-term loans and debt, a great resolution would be to paying them off.
“People underestimate how much money they can save in interest charges by repaying debt quickly,” Ngubo said.
The next emergency measure to rescue your finances is to take a harsh look at what you really need.
Taryn Schmidt, chief marketing officer at Wonga, advised examining your bank statements every month.
“Writing down a detailed list of every transaction is a great way to put things into perspective,” Schmidt said.
“It helps you realise just how many automatic deductions go off your account, which of them are redundant and how frivolous much of your spending is.
“Most people could save upwards of R1000 simply by cutting back on frivolous spending,” she said.
Schmidt advised automating savings and investments so that you aren’t tempted to use the money elsewhere.
“Set up an automatic transfer into your savings account on payday. This way you prioritise saving.”
Finally, when you set out your intentions for 2020, spare a thought for the longer term and let this year be the foundation for a financially healthy future.
Gail Corder Fischer, co-founder and executive vice-chairperson of global real estate company Fischer & Company, said there were four factors you need to prepare for.
“To become financially bulletproof, be smart and prepare against the biggest threats to your financial future: debt, death, divorce, and bad decisions,” Fischer wrote on business news platform CNBC.
“Save money for retirement and plan for investments and emergencies, and when the financial success that you have worked so hard for arrives, don’t blow it by overspending.
“Always live below your means. The more successful you become, the more important it is to watch every penny. Once you aren’t as financially constrained, it’s easy to get caught up in the feeling of success and spend too much.
“Finally, watch out for hidden fees, including the ones from your financial advisors,” she wrote.