Five financial resolutions to stick to in 2015

NEW Year's resolutions come and go, but if there is one aspect of your life where you should try to change resolutions into habits it's your finances. This is the year to reinvent the way you bank and think about your money.

Listed below are five tips and things to remember provided by experts at FNB to ensure that 2015 will be a great financial year.

#1 Turn on the tech – Sahil Mungar, FNB Digital Banking

Digital banking is often misconstrued in comparison to the classic way of banking; iting has numerous benefits that many might not know.

"If you are not making the most of your bank’s digital banking platforms yet, you're causing yourself unnecessary inconvenience, wasting your time and, most importantly, you are probably paying more on banking fees than you need to, as digital banking is cheaper than traditional banking and in most cases is free," said Mungar.

Adding to the disadvantage of banking fees is the time spent travelling to and from bank branches and ATMs, while it could be done from the comfort of your home.

"If safety is your excuse, banks have sophisticated safety measures in place to ensure that your money is safe, whether you are using a banking app, cellphone banking and online banking," he said.

Enjoy the convenience of your bank’s digital banking platforms.

#2 Buying your own home – Tommy Nel, Head of Credit FNB Home Loans

"If 2015 is the year in which you plan to buy a new home, there are a few things you need to do in order to ensure and secure the best possible interest rates," said Nel.

1. Manage your credit affairs prudently by always making your required payments on time. Never exceed the limits in term of credit facilities made available to you. It is also generally not the best idea to use more than 80% to 90% of your credit limits, as credit providers may conclude from this that you do not manage your financial affairs that prudently. A better credit score means a better price.

2. To get the very best rates on offer, be prepared to put down a bigger deposit and ask your bank what deposit size will get you the best rate.

3. Finance for 20-year home loans is typically also offered at lower interest rates than 25- and 30-year finance. So if your bank offers you a 30-year loan, make sure that you also get a quote for a 20-year loan from your own or a competing bank to make sure that you don’t pay more for a 30-year loan if you don’t really need it.

You will end up paying significantly more interest when choosing a 30-year home loan, versus paying a slightly higher instalment on a 20-year loan.

#3 – Make sure your interest rates are personalised – Chris Labuschagne, CEO FNB Credit Card

All credit users have what is referred to as a credit score which is based on your individual risk level. Your risk level is mainly assessed on your past credit usage and adherence to the repayment terms. As such, by paying your accounts on time you are indicating a "low risk level" which will assist you in building a good credit score.

When applying for credit make sure that your service provider prices your credit based on individual risk levels, and not a generic model or a "one size fits all approach", which would result in you paying more to compensate for their high risk users.

It is important to note that a bad credit score or being under debt review could result in you being declined a loan.

In these instances some customers are forced to seek credit in the informal sector, which often results in people paying a lot more for their loan. Customers are urged to not follow this often costly route.

#4 – Build your emergency savings fund – Aneesa Razack, Head of Strategic Growth, FNB Savings and Investments

Saving for emergencies is important regardless of how much you earn, because when emergencies arise, they are usually unexpected. 

For example, if you bump your car and you need to pay excess on your insurance, you might have to fund it with expensive forms of credit like personal loans or your credit card if you don’t have any savings dedicated for emergencies like these.

The general rule is that your emergency fund should contain enough money to cover at least three to six months of your living expenses.

It is important to remember that when it comes to saving for any goal, time is definitely your ally – the longer you save, the bigger the benefit. So start saving early this year. This way, if you are faced with an unexpected event, you won't have to dig into expensive debt.

When taking out a savings product for your emergency fund, the two essentials to remember are:

1.  Immediate access - because you need to access your funds when the need arises at no cost.

2.  Low-risk product - because you always need to be certain about the value of your emergency fund.

In most instances cash-based savings or investment products at your bank are perfectly suited for low-risk needs and will give you the level of accessibility that you need.   

Also, don’t be discouraged if you can’t save ‘big amounts’. Regular savers benefit from earning interest on interest, referred to as compound interest, which in turn boosts your savings.    

#5 – If you are tying the knot– Eunice Sibiya, Head of FNB Consumer Education

Reading the fine print from all the suppliers involved in your wedding is crucial in avoiding additional costs that could result in overspending on your budget.

Make sure that you enquire about corkage fees, whether tea and coffee are included in the cost per head at the reception, as well as whether pre-wedding meals such as lunch is included or excluded in the event that you are getting dressed at the venue.

For those who have chosen a destination wedding, find out whether a minimum night’s stay applies for your guests who choose to stay over and be sure to factor in the transport fees of getting decor and other items to and from the venue.

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