It's the new year, which means you have an opportunity to hit refresh when it comes to your finances. Juggling your finances and staying on top of them is a balancing act.
Furthermore, you need to know how and when to adjust accordingly to avoid drowning in debt or missing your financial goals for 2023. Speaking to a financial advisor is the first step to help you find your sweet spot financially, but for now here are five tips to help you get your finances on track throughout the year.
Know where you stand when it comes to your credit and debt
It's important to keep an eye on your credit score, even if you don't carry a balance. A good credit score can help you get lower interest rates on loans and find cheaper car insurance. It is equally important that you understand the impact of debt on your credit score and how it will affect your power to lend in the future. Aim to minimize your debt before taking on more.
Make financial goals
There is power in visualisation. So, after reading this post, write down your financial goals for the next five years. Do it on paper or on your phone. But just do it. Whether you want to purchase your first home or second property. Start planning for your child’s education needs. Planning and saving for a holiday or planning how you are going to achieve financial freedom, write it down and plan how you are going to achieve your goals. To put our goals into action, we need to see them every day. It will motivate you to keep track and keep you on the right path, away from distractions.
Create a spending plan
Creating a spending plan is the most important aspect of forming good financial habits. A spending plan will help you get your finances in order and keep them there. It's also a great motivator for sticking to your goals, since it offers daily reminders about what you can do to stay on track. That said, creating a budget can be intimidating, especially if you've never done it before or don't know where to start.
Know how to protect yourself financially
The previous year was a tough one for many South Africans. Making ends meet when faced with an unexpected problem, inflation and balancing your own finances can be tricky when you do not have a safety net in place. Make sure that you have financial safety nets in place for 2023 such as life cover, an emergency savings account, and responsible investments that can increase your income and also protect you when you need it the most.
Plan for your retirement while you still can
It may be tempting to put your head in the sand and pretend you don’t have to worry about retirement until it gets closer, but that can be a big mistake. The sooner you start saving for retirement, the more money you’ll have when it comes time to retire.
You should aim to save at least 10% of your pre-tax income each year. If that seems like too much of a sacrifice right now, start with a smaller amount or with an affordable policy that can be beneficial for you when you decide to retire.
