THE start of the New Year comes with a lot of introspectionabout your life, decisions you might have made and plans for your financialsituation. Instead of worrying about how you overspent money during the holidayseason, you can use this opportunity to start over by making long-termfinancial decisions that will be rewarding to you and your family.
COMMIT TO GETTING BACK ON TRACK
Momentum Consult Practice Development Manager, Kalay Pillay,says it is not too late to get back on track. However, this is a process thatwill require commitment. The reality is that some people are in so much debtthat they have given up on ever getting back on track. But financial expertssay ignoring your financial problems doesn't make them go away. "People shouldwant to be debt-free and changing your mindset is a good place to begin. Weoften self-sabotage by ignoring debt. This only escalates the problem and onlymakes it harder to overcome," says Kalay.
SPENDING MONEY ON WHAT'S IMPORTANT
It is often easy to think about what you need now withoutreally thinking about the important things that you might need in future. Asyou commit to being more financially savvy from now on, Liberty FinancialPlanner, Boitumelo Mothoage, shares what you should consider prioritising whenyou think of spending your money.
? School fees or a deposit on a house or car: For shorter-terminvestments, where the time frame is between six and 12 months, you shouldconsider money market funds or a fixed deposit, which can guarantee yourcapital and a reasonable interest.
? Investing in your child's university education: You shouldstart investing in your child's tertiary education as soon as possible so thatthe growth on the investment can assist in combating the aboveinflationincreases in education costs. You should consider investment products that growat a rate above inflation.
? Saving for life goals: Many people have goals that theywish to achieve over the next 10 years such as starting their own business ortaking extended leave from work. It is wise to invest in a product that willgrow ahead of inflation.
? Preparing for the golden years: It is important to savemoney so that you can retire comfortably. A retirement annuity plan allows youto supplement your pension fund offered by your employer, especially if youcashed in your retirement fund when changing jobs and are now playing catch up.
? Investing in yourself: Investing in yourself throughfurther education or starting your own business is equally important. It isimportant that your financial adviser looks at your plan holistically and findsa balance in meeting all your investment needs.
WHERE TO START
"Having a budget and a financial plan are important tools toensure you remain disciplined. Making a few sacrifices in the new year isimportant and cutting back on luxuries is essential," Kalay says. Both Kalayand Boitumelo believe that getting a financial adviser may help improve yourfinances. Kalay says, "Financial advisers are experts in this field and willensure a budget is drawn up and a financial plan is put in place. They willhold you accountable and help you achieve your goals."
