6 steps to overhauling your finances in 2018

Posted on 2018-01-10

6 steps to overhauling your finances in 2018
 

It’s the beginning of a new year and there is a lot to be achieved over the next 12 months. When looking ahead, it’s important to factor in the financials. Just as many of us start a new year with the determination to lead a healthier life by overhauling our diet, we should also be overhauling our finances with the goal to achieve a healthier, more positive financial situation.

Don’t be overwhelmed at the thought of keeping up with your finances. Armed with the knowledge below, and the determination to succeed, you could be ringing in the following year debt-free and living your best life.

 

Step 1: Begin by setting your financial goals.

Every year is unique, just as financial goals for every year are unique. You’ll need to decide whether 2018 is the year you buy a house, pay off your vehicle or wipe out credit card debt that has been weighing you down. Your objectives will dictate your financial plan for the year, so go boldly into 2018 with your financial goals clearly laid out.

Step 2: Review your fixed expenses.

It’s a good idea to review your retirement annuity contributions, as well as your life cover and other insurance products that are deducted off your account every month. Perhaps there is a better deal that you are missing out on, or a way you can update your policy online to ensure it’s in line with your current situation. Perhaps you have reached an age or stage of life where you should consider increasing your pension fund contributions. What about your medical aid? Are you still on a plan that is right for your family as it is now? These should all be factored into your new financial plan.

Step 3: Calculate your net worth.

Your net worth is your assets minus your debt. Knowing this will help you understand how you are doing financially. The most basic way to do this is to write down what you own – cars, property, jewellery, investments and the money in your accounts – to get a final approximate amount. Then list your debt and subtract from the first amount. Simple, right?

Step 4: Create a budget.

Drawing up a simple budget that tracks your income, fixed expenses and changing expenses will help you map out what you can save and what you can put into debt, or just help you stay on track to meet your financial goals. If you don’t already have a budget, there are a number of useful budget planners and apps that can help you get started. If you already have one, then relook it for the new year and tweak according to your new goals.

Step 5: Plan a financial calendar.

A financial calendar is basically a monthly review and outline of payments due, expected income and events to remember that will impact your budget. Plan time in your diary to sit down once a month with your financial calendar and check where you are and how your budget is doing. This is a good habit to get into and will help you stick to the ultimate plan.

Step 6: Find a financial buddy you’re accountable to.

When you’re making a change and you want to stick to it, it helps to be able to talk to someone about it and any difficulties you might be facing as a result of the journey you’re on. Your financial buddy doesn’t necessarily need to be a financial advisor – perhaps your partner, or a friend or family member. Having someone to hold you accountable to your goal is a really motivating factor for staying on track when things get tough.

Budget Insurance Company is an authorised financial services provider with FSP number 18178.