As you plan for your New Year resolutions, don't forget to make room for your financial goals. To help you get started, here are 5 ways you can stay on top of your finances in 2017.
1. Keep track of your monthly expenses
Building a budget can be overwhelming for first-timers. It will be helpful for you to follow the 50-20-30 Rule on your income – 50% for necessities like housing and food; 30% for entertainment or luxury items; and 20% for financial goals like saving for your retirement.
2. Pay off your debts as soon as possible
Clearing your debts early means saving on any additional interest incurred during a longer repayment period. However, take caution not to overstretch your finances and commit to repayments you cannot afford.
3. Build an emergency fund for urgent situations (injury, illness, retrenchment, etc.)
Accumulate at least 3 to 6 months of your average living expenses as emergency funds. You can start by setting the target amount, and doing the math to find out how much you actually have to set aside every month to get there.
4. Automate monthly contributions from your income to savings account(s)
Automating your monthly contributions to your savings is a hassle-free way to keep up with your savings goals. Since you only have to make the decision to automate once, there's no need to recommit a portion of your income to savings every month. Consider automating a contribution of 10–20% to your savings. Depending on the options offered by your bank, you might even enjoy special interest rates on your savings.
5. Compare and consider before making purchases
Have you ever felt a sense of regret and guilt after spending money on something unnecessary? Retail therapy can be a costly habit if you give in to impulse purchases, so always take a step back and think twice before reaching for your wallet. Consider if you are satisfying a need or want, and whether that amount of money could be better spent on something else that provides you with more value. Don't be afraid to spend money though, as long as you are not doing so carelessly.
Information accurate as at 28 December 2016.