Start the New Year with a focus on your financial health. Explore six essential steps to improve your financial future today. File photo.
New Year’s resolutions often prioritise physical and emotional health—whether it’s committing to a gym routine, making mindful food choices, or setting personal boundaries. However, the start of a new year is also the perfect time to focus on your financial health.
Jessica Beattie, acting chief marketing officer at Bidvest Life, emphasises: “Financial well-being does not happen overnight, but you can start making progress today with as little as R100 every month.”
Here are six actionable steps to enhance your financial health:
1. Understand your money mindset
Before you can change spending habits, it’s crucial to identify the root cause of any financial imbalance. Are you overwhelmed by debt? Lacking a safety net for emergencies? Struggling to manage monthly bills? Pinpointing the source of your stress will help you develop targeted solutions to address your challenges.
2. Eliminate debt
Reducing debt is fundamental to freeing up cash for investments. Begin by creating a budget that prioritises paying off high-interest short-term debt. Then, apply the ‘debt snowball’ strategy:
3. Focus on the future
Owning your financial future starts with a solid savings and investment plan. Even modest, consistent contributions can lead to significant results over time. For example, contributing R100 monthly to a retirement annuity starting at age 22 could grow to R2.5 million by age 70. Waiting until age 32 reduces this to R700,000¹. Regardless of the amount, the key is to start now.
4. Protect your income
Your income supports your lifestyle and financial commitments. Ask yourself: Would you be able to afford essentials like insurance premiums, household expenses, and school fees if your income suddenly stopped? Income protection ensures you can meet financial obligations during periods of illness or disability when you are unable to work.
5. Plan for your passing
A will is essential for ensuring your assets are distributed according to your wishes. Without one, the state will make these decisions, and your loved ones might not benefit as intended. Keep in mind that even with a will, bank accounts may be frozen for years while your estate is finalized. To alleviate this burden, a life insurance payout can provide your dependents with a steady income to cover bills and expenses.
6. Partner with a professional
A certified financial adviser can be an invaluable partner in your financial fitness journey. They can suggest tailored savings and investment plans, help you select the right products for your specific needs, and guide you in managing risks effectively.
Beattie says: “Your journey to financial well-being starts today. With determination, the right strategies, and an adviser at your side, you can begin building a more secure future right now.”
Assumes a 16% annual retirement annuity contribution increase and a 10% growth rate.
PERSONAL FINANCE