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Better money management for 2024

by | Jan 30, 2024

After festive-season overindulgence, many of us need a financial detox in January. Here’s how to attain better money management and revitalise your finances this year.

Better money management for 2024The festive season can strain our finances to breaking point – our December salaries must last for six weeks while we spend on everything from gifts and family gatherings to school fees and stationery. We often rely on credit cards and payment breaks to survive “Janu-worry”.

Whether you make New Year’s resolutions or not, there’s no better time to overhaul your finances than the beginning of the year. Farzana Botha, segment manager at Sanlam Risk and Savings, says the first step is taking stock of your financial situation.

“Because we often feel the need to keep up appearances, it can be very refreshing – even affirming – to be honest with family and friends. It can be very cathartic to ‘come clean’ about where you’re at,” she comments.

Here are some tips for better money management throughout the year.

Clarify your financial goals

What would you like to achieve this year or within the next few years? Is your budget fit for purpose? If not, work with a money coach or a financial adviser to help you set priorities and draw up a spending plan.

Understand your commitments throughout the year and plan ahead for the festive season to avert another “Janu-worry”.

Work through your bank statements to identify spending patterns and items you don’t need, such as subscriptions you don’t use often, or memberships that have expired.

“Consider a budgeting tool that works for you, such as zero-based budgeting, the ’50-30-20 method, or cash stuffing,” says Botha. If you’re tech-savvy, use apps to manage your money more effectively.

Erin White, a certified financial planner at Crue Invest, recommends you assess whether you’ve spent in line with your budget. “This reality check will ensure you’re being realistic about your expenses and can highlight any problem spending habits,” she points out.

Pay yourself first

According to the Deloitte South African Investment Management Outlook for 2023, South Africa’s savings rate is 0.5%, far below emerging-market peers Brazil (16.9%) and India (10.8%).

Adopt the “pay yourself first” principle, which allows you to accumulate savings to cushion you in a crisis or achieve future goals.

You should ideally budget to save around 10-15% of your earnings before tax, but if you can only manage R100 a month, start there.

Set up a direct debit to automate the saving or you may never find the funds to start. White recommends you automatically increase the amount each year to ensure your savings keep up with inflation.

Work at getting out of debt

DebtBusters’ Q3 2023 Debt Index shows that South Africans are spending 63% of their take-home pay, on average, to service debt.

Getting out of debt should be a priority, says Botha, and it’s wise to pay more than the minimum monthly instalments to avoid additional interest. Settling your smallest debt first gives you a psychological boost and frees up funds to tackle your next-smallest debt.

If you’re overindebted, you should consider debt counselling, which can greatly reduce the interest rates on unsecured loans, free up cash, and help you pay off expensive debt faster. However, be aware that this is a legal process, and you will not be able to apply for further credit while under debt counselling.

Make full use of your reward programmes

Many of us are members of reward programmes, but few of us use them optimally.

Understand the benefits, such as exclusive offers, discounts, and points that can be converted to cash, and keep track of goals that will allow you to reach higher “tiers”, unlocking greater rewards.

Revisit your insurance

If your policy is up for renewal, get quotes from three or four insurers to determine if you’re getting the best value for money.

Remember to ask about factors such as the excess you may be required to pay (the lower the excess, the higher your premium), benefits such as cashback, and whether there are penalties for cancelling with your existing insurer.

“Make sure your car is valued correctly and isn’t over-insured,” cautions Jamie Surkont, CEO of getWorth.

Vehicle and transport savings

If you’re in the market for a new or second-hand car, save up for a deposit or opt for a trade-in, but make sure you can at least settle the outstanding balance on an existing finance agreement. Although this amount can be added to your new vehicle debt, it puts you at greater financial risk.

Don’t take out a personal loan to buy a second-hand vehicle for cash as the interest rate will be higher than that of a vehicle loan.

If you already have a vehicle, make sure it’s maintained to manufacturer specifications, which will save you money later if you decide to sell.

If you don’t have wheels but need a ride, consider hiring a car, which can sometimes be more affordable than using a ride-sharing service.

Spending and saving tips

Small changes add up to big results. Try these hacks for better money management:

  • Shop with a list. If you’re buying in-store, stick to what’s on the list and avoid impulse buying.
  • Plan your meals in advance. This helps to avoid food waste and contain costs.
  • Buy generic brands. Store brands are just as good as premium brands, especially when it comes to groceries, cleaning supplies and medications.
  • Compare prices. Be a savvy shopper – use online platforms and tools to compare costs and keep a record of which stores increase their prices most dramatically.
  • Get handy. Learn basic DIY skills and save on minor repairs, maintenance, and home improvement.
  • Buy pre-loved items. There’s a huge market for used items in South Africa, especially at auctions. You can find quality and bargains if you know where to look.
  • Opt out. Some subscriptions renew automatically, so cancel those you don’t use.
  • Hang on to your cellphone – for now. Delay upgrading your cellphone once your payment plan has ended. You can save the premiums you would have spent on a new contract to buy your next phone with cash.
  • Put impulse spending on ice. You can wrap your credit card and put it in the freezer – by the time it’s thawed, the desire to purchase an item may have passed!

Apps for better money management

The following apps can help you manage your money better this year:

22seven (free)

A favourite among money-savvy South Africans, 22seven, which is powered by Old Mutual, allows you to safely link all your bank accounts in one place.

22seven automatically creates a personalised budget for you based on your current spending habits and allows you to track where your money goes. You can compare your spend with other app users in a similar income bracket, too.

You can also use the platform to manage your investments and loans, and track your net worth.

Beyond Budget (R29.00 a month, R179 a year, R359 for a lifetime subscription)

This very easy-to-use app allows you to merge and manage your family’s finances, consolidating all bank accounts on one app.

You can set up reminders and repeating transactions, plan your spend, and track your budget even when offline.

Earn badges, increase your financial literacy via the knowledge hub, and choose a budgeting style and colour scheme to suit you. The cost of a subscription also helps the developers plant trees to green the planet!

YNAB (You Need a Budget) (Free trial for 34 days, R254.99 a month, R1 699.99 a year)

YNAB is a global budgeting app but you can set your base currency in rands.

Visually appealing and easy to use, YNAB allows you to plan your spending with a zero-based budgeting system (this means allocating every cent of your income towards your goals).

It’s an easy, practical way to manage money and you can set targets, track multiple bank accounts, or work with a current balance and enter your transactions yourself. It’s pricey but hands-on and encourages you to take control of your cash.

Stash by Liberty (free)

This tax-free investment app allows users to save small amounts of money every day by linking it to an existing bank card. Any South African with an ID number can sign up, and there are no fees involved.

You can deposit as little as R5 a day – or join the 10c challenge, which asks you to contribute 10c for every day of the year. You can invest your money into either an SA Top 40 shares portfolio (earning dividends), a Cash+ portfolio (with a 5.5% annual growth rate), or both, depending on your needs and goals.

This article first appeared in City Press.

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Maya Fisher-French author of Money Questions Answered

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