The year has just started and almost everyone is excited about the New Year and what it brings. It is during this time we remember the past and plan for the future. Many of those plans involve our finances. Nico Coetzee of PPS Financial Planning has put together a quarterly financial planning guide, to help you plan your finances for the year.
January: Create a personalised monthly budget
The power of a basic monthly budget should never be underestimated. You should use the first month of the year to develop a template by listing each month and recording both expenses and income so that you can easily identify areas of overspending and act on this before it gets out of hand.
For example, according to the Animal Behaviour Consultants of SA, the cost of owning a medium sized dog accumulates to around R12 000 a year, while owning a cat amounts to around R9 000. This cost combined with a monthly DSTV subscription will take out almost R32 000 of a household’s budget for the year. It is clear to see why it is important to have a budget otherwise expenses can get out of control without even realising it.
February: Tax and tax benefits
With the end of the tax year looming, you should use this month as an opportunity to maximise the tax benefits provided by products such as retirement annuities and tax free investment accounts in your retirement and education plans.
March: Consolidate debt repayments
Now is a good time to identify any accounts or loans with high interest rates, such as credit cards and short-term personal loans, and try to pay as much money per month as possible toward these debt repayments.
You should not wait until you are contacted by a planner before you start working on your financial plan, but rather collaborate with a planner who understands your personal needs in order to achieve financial independence.