Reach your financial goals

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The Bulletin, Secunda, Money and Finances, Reach our financial goals

Setting personal, professional or financial resolutions that are hard to attain can be demotivating.
That is why it is so tempting to forget about financial New Year’s resolutions by the time we reach March.
Fanele Maglaba, Junior Account Executive at Change the Conversation communications specialist company, said it takes financial discipline and grit to stick to our plans.
Ecsponent Financial Services Country Manager, Floris Slabbert said: “If you are already off the track you envisaged, do not despair.
“All is not lost and it is not too late to get back on track.”
Floris highlights the four most attainable financial resolutions you can make now to get back on track to ensure you meet your 2017 financial goals.
1. Budget and spend wisely
By drawing up a monthly budget, you are already taking control of your finances. To take this process to the next level, add provisions into your budget that include inflation, potential interest rate hikes and annual premium increases, over and above the basics.
In order to create a realistic budget, prioritise necessities like bond repayments, water and electricity payments, vehicle finance instalments, medical aid and retirement contributions, insurance premiums, school fees and debt repayments. Another necessity to add to this list is saving. Often, people add this to the end of their list of financial priorities, but to create wealth you must pay yourself first and then spend what is left over.
After providing for the necessities, add the rest of your expenses like groceries, clothing, entertainment and club or gym memberships.
If there is anything left over – or if you come into some extra money like a bonus – incorporate the money into your budget and use it wisely.
Instead of spending without any thought, consider paying a portion towards your debt. You can also make additional contribution to your retirement fund, which will be rewarded with a tax benefit too.
2. Save and think of the future
As mentioned before, saving is a priority. Start by setting aside a realistic amount every month – no matter how small the initial amount is that you begin with. This will help you build up a reserve fund for unexpected emergencies, and later longer-term plans such as the cost of a family holiday or saving for your children’s education.
A savings plan with a notice period, even just 24 hours, will prevent you from withdrawing your savings on a whim but ensures you will still have fast access to funds.
To challenge and motivate yourself, keep track of how much you save each month. Chart your progress by recording how much closer you are to reaching your goals.
3. Deal with debt
While strict budgeting will help you to avoid acquiring new debt in 2017, getting rid of some debt should also be on the list of priorities. It will go a long way to ensuring your financial freedom in the long run. Consider increasing the amount you set aside to pay off credit, even if it’s only an extra R50 to R100, the money you could save by paying it off faster is staggering.
Case study
John and Su-Anne have a bond of R1.5 million, registered for a term of 20 years and their interest rate is fixed at prime +1%.
If they pay only the bond amount for 20 years, they will pay over R3.8 million in capital and interest over the term of the loan.
If John and Su-Anne pay an extra 5% towards their bond, they will not only save more than R430 000 in interest and costs, but also shorten the term of their bond by at least 36 months.

If adding an extra amount to your existing repayments is not feasible, at least review all credit agreements older than two years to check that the interest rates are in line with the limits set in the National Credit Act.
Once your debt is paid off, take steps to minimise the risk of excess debt in future.
Some successful strategies to stay out of debt includes reducing your credit limit or closing credit card accounts.

4. Think about quick wins
Setting a resolution that is somewhat of an ‘easy win’ can motivate you to stay on track when it comes to longer-term financial goals. These could include ensuring a comfortable retirement or providing for your children’s studies.
With this in mind, try to set some relatively short-term goals that have exciting and immediate rewards. For example, clean out your cupboards or garage and sell all your unused, unwanted or unnecessary bits and pieces. Consider the cumulative effect of day-to-day savings like switching out incandescent bulbs for energy saving LEDs, or fixing tap and toilet leaks.
These actions have distinct winning outcomes.
You are clearing clutter and saving on regular expenses – putting money back into your pocket almost immediately.

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