Q: I’m clueless about money but am starting to panic about my lack of savings and long-term planning. What should I be doing?
A: Many of us make resolutions at the start of the New Year. Why not make yours about money? To help you stick to them, draw up a 12-month plan and on the same day each month record your progress.
Resolution 1 > Write down your financial resolutions, highlighting those areas where you need professional advice, then make an appointment to see a financial advisor.
Resolution 2 > If your resolutions seem a bit overwhelming, divide the list into big and small issues and resolve to tackle one of each at a time.
Resolution 3 > Prioritise debt. Make a list of your debts in order of those that incur the highest annual interest rate. The debt with the highest rate should be settled first.
Resolution 4 > Make a Will. This is extremely important and can have far-reaching consequences if not done correctly. Most banks can provide assistance, or speak to your financial advisor.
Resolution 5 > Ask your financial advisor to help you put together a realistic financial plan that suits your income and provides for both your short- and long-term needs. Many people have such unrealistic plans they feel are so unattainable that it’s not worth trying.
Resolution 6 > Re-price your short-term insurance. Speak to alternative brokers and ensure you are adequately covered, i.e. that your car is covered for the market-related price and not the price you originally bought it for three years ago. Most insurance companies will only pay out the difference between the market-related price and retail price and you could be paying for cover you do not have.
Resolution 7 > Re-examine your medical aid plan. How have you used it in the last yeary It’s pointless choosing a plan because it’s cheaper if it can’t provide the cover you really need.
Resolution 8 > Share your financial concerns with your loved ones. Many women prefer to keep their finances separate (which is a good thing) but you can still discuss the wider picture with your partner. Sharing anxieties brings immediate relief, and your partner may be able to give helpful advice.
Resolution 9 > Set up an “emergency fund”. This money should be easily accessible, either through a money market or savings plan.
Resolution 10 > Boost your retirement funds to the max. Statistics show that only three percent of the population is financially independent at retirement. Rather live more modestly now and save adequately for retirement.
Resolution 11 > Keep the taxman happy. The Receiver of Revenue has reduced tax rates substantially. Pay what you need to pay; it’s not worth having SARS breathing down your neck.
Resolution 12 > Improve your understanding. You don’t have to become a qualified accountant, but learn more about money by reading the financial pages of your local newspaper or financial magazines. The more you know, the less likely you’ll be taken in by smooth sales talk. Often we take the first advice we are given because we don’t really understand what we’re being told.
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