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News Room

Overhaul Your Financial Health In 2020

Jason Snyman
2020-01-13
It's time to shake off those 2019 blues and refocus our efforts! A brand new year calls for an overhaul of your financial health, so, we put some nifty ideas together into an easy 7-Step guide to help you get started.

We should all set some time aside to spring clean and declutter our homes, to put our thoughts and goals and ambitions in order, to refocus on the important things. Why should our finances be any different?

It's a new year, and it’s time to freshen everything up and let some air in. You’ll be surprised at how much money you could save after giving your finances an overhaul. 

So! Here’s a 7-Step guide (that anybody can follow) to getting a grip on the situation. If you can complete just one step a day, and understand what you’re doing, then nothing will ever overwhelm you.

Let's get into it. 

1. Implement A System / Income vs. Expenses

The hardest part to starting anything is just that: starting. This is true to anything, from exercise, getting into shape, completing work tasks, cleaning your home and, especially, taking control of your finances. 

To kick things off, you'll need a system. If you’re old school (pen and paper) then invest in a good ledger. 

But, if you’re proficient in Excel, or you know of somebody who can help you out, then setting up a digital worksheet works best. With this, and a number of well-placed formulas, you can track exactly how much money you've got coming in every month, and how much you’re spending. 

By doing so, you can create a monthly budget. 

Begin by analyzing your income and expenditure – because you need to know where you stand with these, and you need the budget to manage them. This also involves making a list of your assets and adding up all your debt. You'll then need to compile a list of any new purchases, new debt you've made and, as you go, remove the debt you’ve cleared.

2. Make Saving Automatic

You need to know what you’re saving for. What are your goals and motivations? How much will these things cost and how long will it take to get there? Work out what you can cut or how you can free up some money to achieve this goal. 

This is an important step, because it puts everything into perspective. We’re not working for nothing over here.

The key to saving is, eseentially, to make it an automatic thing. Wanna splurge? Don’t do it. Save money. Don’t waste. Reuse and make smart purchases, it’s time to throw out any expensive habits. If you feel the urge to splash the cash, take a look at your goals. You’re not gonna reach them by throwing your money away. 

In the end, it will be worth it.

You also need to ask yourself if you could be earning more money. If you have the energy and the time, why not look at supplementing your income? Most, if not all of us, have talents and skills that we could earn some money off of. If something comes along that's easy enough to do, worth your while, and won't interfere in your primary career, why not take it? 

Game of Thrones is over. We've got no reason not to be doing something more constructive with our free time.

3. Review Your Investments

A periodic review of your investments will reveal whether your allocations are out of balance, and if you’re taking the right amount of risk. A portfolio geared for growth and income commonly holds around 60% stocks and 40% bonds. For people with a higher tolerance for risk and a time horizon of ten years or more - these could be at 80% stocks and 20% bonds. 

Of course, times change at a whim, and if you're not entirely sure of what you're doing, or how to get the best out of your money, it's wise to speak to a reputable finance guru. There are also a number of free services or tools online which can help you accurately assess your situation.

4. Know Your Credit Score / Review Your Banking

Many of us don’t know what our credit score is, but this is actually pretty important. 

A high credit score could mean better deals for credit cards, loans, mortgages or store contracts, so, knowing your score, and ways to improve it, can both increase your choices and save you a bunch of money. 

Also, avoid new debt at all costs. Make 2020 the year that you put old debt to rest, instead.  

Does the end of the month light your phone up like a guy fawkes celebration? Too many debit orders going off, or are you paying too much on banking charges? How about all those subscriptions and memberships you don’t need, or don't use anymore? 

Cancel unnecessary expenses. You can always pick up where you left off some other time. Likewise, how and where you choose to bank and spend makes a big difference, and it's worth reviewing.

5. Organise Your Documents / Get Your House In Order

If you’re in the habit of filing all your important documents, good job, because this is also key to maintaining your financial affairs, and it isn't always easy. 

You shouldn’t hang on to anything for any longer than you need to, though. Save the essentials, and toss the rest. Keep receipts for the big things, like furniture, appliances, vehicles and technological items until they are disposed of. This is first and foremost for insurance claim purposes – providing proof of ownership and their value. Tax return supporting documents, student loan documents, credit card statements. Real estate, banking, bitcoin, insurance, retirement plans, employee benefits, etc – these all need to be sorted out. Keep records of savings, investments and property until they are sold so that you can have an accurate record of your assets. If you have a scanner handy – even better. 

Keep all your records safe and sound and tidy in desktop folders.

Likewise, it doesn't matter who you are, or what you do, or how wealthy you are. You need a valid, updated Will. Without one, your estate and all your wishes are a tangled mess. If you already have one, use this time to ensure it’s up to date, especially if significant events have taken place since you last assessed it. These events could include the birth of children, a change in your marital status, the death of a beneficiary or executor, or if you have acquired any new assets. 

If your financial circumstances have changed, like, say, that Nigerian prince / estranged relative who kept emailing about unclaimed family treasure finally came through for you, then you may need to make provision for this in your Will as part of your estate planning.

6. Assess Your Insurance Policies

This is worth checking on every once in a while, or following any significant changes to your life. You need to know that you are correctly insured - neither over-insured nor under-insured - and that all of your details are up to date and correct. 

The change in the replacement value of your assets should be reflected in your insurance policies. Remember that some assets are likely to appreciate, such as art or jewellery, whereas others will depreciate, like a Ford Kuga, the very minute you buy it. This is something that you'll need to keep an eye on.

Your long-term insurance should also be current. Do you have any children now? Have you gotten married? How about installing a new security system in your home? Assess your changed circumstances and adapt your insurance accordingly. Not only will this prevent any problems during the claims stage, but it could also lead to reduced premiums or other discounts and benefits if you haven't claimed in a long time,

Speak to a reputable insurance Guru for advice on how to get the absolute best out of your policies this 2020.

7. Finally, Face SARS

We know. We know. 

Nobody wants to do it, but it’s got to be done at some point. So, you may as well make it the final act in your financial overhauling opus. 

Collecting, compiling, sorting and submitting all the necessary documents to SARS can be a pain, but if you qualify for tax refunds – ka-ching! 

If you have any tax-deductible expenses, such as medical aid or pension fund contributions, you will likely qualify. At least, until the NHI is in full swing. There are a number of online sites, such as TaxTim.com, which can help you get this done. 

CompareGuru knows what's good. You'll never need another insurance comparison tool again!

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