You normally make your New Year’s resolutions in January after a few weeks of festive season spending and indulgence. This year, why not make your financial resolutions before the festive season and make sure that you start 2015 on a high note? Here is our six-point plan for getting your financial house in order right now and making next year the year of the positive bank balance.
While most people know what they earn, according to research from Columinate, only 51% of respondents use a budget. Learning to live within your means according to a monthly budget is the golden rule of personal finance. Find an app or online tool that works for you - even if it is just a spreadsheet - draw up a monthly budget for the coming year and promise to stick to it.
Consider how you could be saving on food, petrol, clothes and entertainment in the coming year. Start by reading our top 10 savings tips and advice on how to save on petrol. Remember that even a saving of R200 per month will quickly add up to R2 500 by the end of the year.
One of the most important line items on your budget should be a regular monthly amount that’s allocated to savings. The experts say you should be saving between 10% and 25% of your salary, depending on a number of factors like your life stage, how much debt you have and how much you have saved towards your retirement.
You should be putting money aside for all the expenses you will incur during the year – like a holiday or new clothes – so that those don’t come out of credit. You should also have a rainy-day fund for unexpected expenses as well as think about longer-term savings like a deposit on a house or car. And of course it’s never too early to speak to a financial planner about putting money towards your retirement.
If you do no other financially sensible thing in 2015, get rid of your debt. Draw up a plan to pay it off over the next 12 months and don’t allow yourself to dip back into it. If you have more than one line of credit, pay back the debt with the highest interest first. And as December approaches, make a very firm resolution that you won’t wear out your credit card on holiday festivities.
If you are fortunate enough to get a year-end bonus, resist the temptation to think of it as “free money”. Use it to pay off debts, put it into your bond or put it into a savings account with a notice period so you won’t be tempted to spend it on your New Year’s party.
Don’t spend more than you should over the festive season. Budget for holiday season expenses and stick to your budget.
2015 is only a couple of months away, but if you stick to your November resolutions and get through December with a positive bank balance, you’ll have taken your first steps to financial freedom in the New Year. By making your resolutions now you will start December empowered and ready to beat the temptation to over-indulge.