SA has had a volatile year, facing multiple fuel price increases, a VAT hike and repeated adjustments to the country's growth forecasts. But for cash-strapped consumers, the new year brings an opportunity to reflect on their spending habits and get financially fit.
"As humans, it's common to want to wipe the slate clean in January, and look for ways to do better than we did the year before," says Citadel Advisory Partner Daryl Coker.
Coker offers ways to your finances in control in the new year.
1. Save with purpose
Firstly, reflect on what you did right, financially, in the year 2018. Next, look at what you can do better in the year ahead.
This may include paying off debts, saving towards a deposit on a home, or even revving up your retirement savings.
"Having a clear and detailed set of goals to measure your progress against will help you to focus your efforts on saving, instead of falling back into bad financial habits and unnecessary spending," says Coker.
2. Budget better
A rise in prices means your budget may look different in 2019.
Look at what you spend on, where you may be overspending and where you can cut back or prioritise your money better.
3. Prioritise debts
Interest rates are on an upward cycle both in South Africa and globally, meaning your debt will likely become even more expensive in 2019.
Create a debt strategy that will help in paying off debts as quickly and effective as possible.
Prioritise your debt repayments, putting the most expensive interest rates first (usually the short-term debt on credit cards) followed by debts with lower interest rates, such as the debts on cars and homes.
4. Price-check your short-term insurance
A simple but often overlooked way of cutting costs is to reassess your short-term insurance cover.
This means comparing quotes from different insurance providers, as well as checking whether your home, cars, and household contents are still covered by your current insurer. Checking you are not over-insured is just as important as not being under-insured.
5. Reconsider that lump sum on school fees
Most of the time, schools offer parents an option of paying school fees upfront as a lump sum, with a discount between five and seven percent for early payment.
However, Coker says, "Consider that by opting for monthly payments, your child is essentially receiving a year’s education upfront and you will not be charged any additional interest on the amount owing – the monthly cost will remain the same, which is almost like receiving an interest-free loan."
If you are going to make a lump-sum payment, he argues, it might be wiser to repay other debt that would charge interest, such as credit cards or your mortgage, thus driving your interest repayments down. Check first what is most cost-effective for you overall.
6. Manage your taxes
With a new tax year on the horizon, high and provisional earners should consider seeking tax advice from a professional for tax efficiency.
7. Time your car purchase
If you are thinking of purchasing a car, it is better to do it beginning of the year. Buying a car in November or December means it will most likely lose a year’s value in January even if it is just a month or two old.