The start of every new year is the perfect time to take charge of your finances and set yourself up for success. You might be saving for a big goal, looking to grow your wealth or just wanting to improve your spending habits. Adrian Hope-Baille, founder of investment platform Fynbos Money offers five actionable tips to help you start the new year with confidence that your money is doing the most for you.
Cut out unnecessary debt
The most important rule in personal finance is to spend less than you earn. If you’re over-spending and living off debt that’s the first thing you need to address. Two things you can do to help you get started are:
Cut up the store cards and focus on paying off those accounts as a priority. Then aim to save up for any big expenses this year instead of buying on credit.
Use a tool like FinWise to get a handle on your spending and figure out where you’re able to cut back and get control of your budget.
Check your emergency fund
Life is unpredictable. An emergency fund can shield you from financial stress when the unexpected happens, whether it’s a car repair, medical bill, or sudden home maintenance. Aim to save 3–6 months of living expenses, tailored to your unique circumstances, in an account that is earning enough to beat inflation but also allows you quick access to your cash. Having a safety net ensures you won’t need to take on unnecessary debt or dip into long-term investments like your Tax-Free Savings Account (TFSA) if you suddenly need access to cash in an emergency.
Understand and manage your “savings rate”
Your savings rate is the percentage of your after-tax income that you are putting aside for long term saving and investing. It’s a popular concept among financial planners in the USA but not something many people measure or track in South Africa. One of the most impactful things you can do to grow your long term wealth is figure out what your personal savings rate is, and then aim to increase it a little bit each year even as your income increases.
Make your money work harder
Your hard-earned salary deserves more than sitting idle in a fixed-interest savings account. If you’re putting money away for a long time, make sure you take advantage of a TFSA that enables you to invest in the market (i.e. shares, not just a bank savings account). A TFSA is the best way to invest for the long term in South Africa as all of your growth is tax free. With low fees, trusted funds, and an intuitive platform, Fynbos Money makes it easy to start working toward your financial goals today.
Review your insurance
Life changes, and your insurance policy should reflect that. You might have gotten married, moved house, had a baby or launched a business, and an annual policy review ensures you’re appropriately covered and getting the best deal. Adjustments can also help you avoid paying for unnecessary coverage while staying prepared for life’s twists and turns. Remember that everything is negotiable. Don’t just accept annual premium increases without a fight! That car you’re insuring has gone down in value, why should the insurance go up?
