Get behind your finances

By admin
12 December 2013

Making clever money decisions will have a great impact on how your new year will start. Take a look back at the past year and try to resolve any money issues you had.

So 2013 didn’t turn out to be the year you lost 10 kg or ran a half marathon. It may be too late to do anything about most of your New Year’s resolutions for this year but if you plan and start your financial affairs for 2014 the new year will be shinny with great financial advantages. Here are good tips to get your life back on track.

  • 1.     DRAW UP A BUDGET

Get a handle on your finances by checking your last few bank statements and accounts. Keep a diary of your daily purchases  and  take note of your income and expenses. There are useful budget tools on the internet such the one offered by Absa (find it HERE).

  • 2.     SCALE DOWN DEBT

Cut back on luxuries, especially over the festive season, and use the money to settle debt with the highest interest rate quicker. Once that’s been paid off add the extra payment to your next debt and continue in this way until all debt is paid off. Close all your store accounts and save until you can afford to buy something in cash. Deposit a portion of your monthly spending money into your credit card account and don’t go into the red. This way you can also earn a little interest.

  • 3.     SAVE FOR YOUR RETIREMENT

You should save at least 15 per cent of your gross income for retirement – if you belong to your company’s pension fund, check you’re saving the maximum amount allowed. People live longer these days and you have to save at least 10 per cent more to ensure your money will last and for other long-term plans. Arrange for a debit order at your bank. To supplement retirement investments consider new-generation annuities – they offer the same tax benefits as traditional annuities without much of the costs and penalties.

4.     CREATE AN EMERGENCY FUND

Many people are forced to borrow money because of unforeseen crises such as illness or redundancy. Aim to build up an emergency fund equal to about three months’ salary to tide you over in times of need.

  • 5.     DRAW UP A WILL

If you die intestate (without a will) it will take much longer to wind up your estate than if you’d had a will. Furthermore your assets will be distributed in terms of the Intestate Succession Act. Consult an expert or if your estate is uncomplicated do research online on how to draw up a valid will.

  • 6.     CHECK YOUR INSURANCE

Check your car insurance – you may be paying too much. Your car annually drops in value and you may still be paying insurance on the original purchase price. If your car were stolen or written off your insurer would pay out only the book value of the vehicle. Contact the insurer once a year to bring car insurance and payments in line with the value of your car. With household insurance make sure the cover provided by your policy reflects the replacement value of your assets. Make a list of your possessions and the cost of replacing them, and then compare the total with the insured amount. Keep all your insurance documents and check the fine print – many policyholders are unaware of losses they can claim for. For instance comprehensive cover sometimes includes veterinary expenses if your pet is injured. You may even be able to claim if your parents lose possessions from their retirement home – or be compensated if you or a family member is tied up during a robbery.

  • 7.     CHECK YOUR POLICIES

Contact financial institutions to check you’re not behind on your premiums and that your elected beneficiaries are correct. Get professional advice before cancelling a policy. If you have dependants but don’t have life insurance get several quotes, including details of commission and payment benefits, before deciding on a policy. Before taking out education or funeral policies check the costs. You may be better off investing in other instruments such as a unit trust or Satrix index fund.

Source: Helena Wasserman ? YOU archives

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