How does a new financial you in 2024 sound? Good? In three easy steps we show you how to start the new year with a fresh financial outlook that will help you achieve your financial goals!
Step 1: Set your goals
Your goals will be things you want for yourself and your family in the future. For example, you have a goal to buy a home for yourself, your family, a loved one, or perhaps as a second property. You may also want to buy a new car, take an overseas holiday, pay for your child’s education, or further your own education.
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Take a few hours to think about what you really want and when, and discuss these goals with your family so you all agree on them. You can use a financial calculator such as 1Life’s education savings, holiday savings, car finance and home loan calculators, to help you work out how much money you will need to save to make your goal a reality!
Make sure your goals are SMART:
- Specific – make them detailed, clear and precise so you and your family know exactly what the goal is
- Measurable – so you know when you have achieved your goal, for example a new home or Rxx saved
- Achievable – set goals not dreams! It’s a dream to win R10 million on the lottery, but a goal to buy a R1 million home
- Relevant – your goals must mean something to you and your family so you are inspired and determined to reach them
- Time-based – set time frames for your goals, such as one, two or five years
When you have your SMART goals and know what you need to do to achieve them then you need to start saving – see Step 2! Track your progress as you save, but keep in mind that there may be easy and tough months. In tougher times, you may need to adjust your time frame. But, always remember that your commitment to your goal will ensure you achieve your goal and could be the start of generational wealth!
Don’t forget to celebrate when you reach your goal. Pencil in that 2028 party now for your five-year goal! Even if it is a few years off, achieving a goal is something you and your family can be very proud of and should celebrate. Plus, knowing the celebration date now will remind you of your commitment and could help you reach your goal in your desired timeframe.
Step 2: Draw up a budget for the new year
Yes, the B word! Good money management and being able to achieve your goals all starts with a budget. It is the most basic personal finance building block. Budgets instil good financial habits in you and your family, to help you achieve financial freedom as well as your goals!
- Draw up a basic budget (list income, deduct expenses, make sure it balances), using the advice in this blog, which includes a downloadable budget spreadsheet
- Make sure that you have added your goals as an essential expense, so they are built into your budget! This way, you'll save first rather than save what is left – which may not be anything!
- Add a few extra rands to expenses where prices are likely to increase such as education, food, transport costs (petrol), electricity and insurance. We don’t know by how much these items will increase, but make a guess based on last year's increases such as 5% more for education and insurance, 10% more for food, 20% for electricity and petrol! Be generous! You can always save what you don’t need if prices don't rise as much!
- Budget for any expected increases in income, for example if you have a guaranteed salary increase
- Add some fat to your budget, so you have spare funds if prices rise more than expected, income falls or there is an unexpected expense
- Monitor your budget each week tracking planned versus actual expenditure so you know if you are over or underspending. If you are overspending and short, find ways to cut back on non-essentials
Top tip: Always be on the lookout for budget tips and tricks. Read blogs and personal finance news, listen to podcasts, follow financial experts on social media and read books. You might pick up some good ways to save and earn more!
Step 3: Work on weaknesses, supplement your strengths
Getting your budget right and achieving your goals can sound like utopia. It needn’t be! You can be a success story and celebrate your financial fitness in the new year!
When you work on any weaknesses you have in your finances, you can over time improve them and achieve the results you want. At the same time, don’t ignore your financial strengths! They can get you through many tough times.
For example, you may be great at finding good deals on the weekly grocery shop, or finding ways to save on transport and meal costs. Or even making extra on your side hustle! And, making sure you pay insurance premiums, any medical aid contributions and investment contributions on time is a brilliant money habit! Acknowledge that these are good for your finances and keep them up!
To help you work on your weaknesses:
- Identify areas where you want to do better, such as learn more about which investments are suitable for your financial goals. Truth About Money’s Financial Education course can help you learn more about investing.
- Find ways to reduce debt, which will give you more money and less stress. You can take Truth About Money’s Ditching Debt course to help you become debt free!
- Find ways to earn more income or improve your cash flow, including the tips in the Cash Crunch course from Truth About Money.
- Include your family in your budget so that they know what is realistic and what is not. Your children can learn lifelong money skills from you and courses such as the Mad Money Skillz course from Truth About Money.
- Team up with a money buddy to help each other stay on track and talk through money successes and concerns.
- Make an appointment with a financial adviser to review your financial plan, including your budget, goals, investments and insurances. Financial advisers are experts who can offer valuable advice on budgeting, investing, creating and protecting wealth!
Finally, never beat yourself up about a money mishap. When they do happen, and they will, take an objective look at exactly what happened so you know how the mishap occurred, and can find ways to avoid it in future.
2024 awaits! Make it your best money year yet
That’s it! Managing your money well and achieving your financial goals isn’t too complicated. It can take some time to get right, but the end result will be rewarding for you and your family. Go for it! We are with you all the way in the new year!