Take control of your finances and make this the year your money works for you. Whether you’re saving for a big goal, looking to grow your wealth, or just wanting to improve your spending habits, here are the five steps to get you started. Cut out unnecessary debt.
The most important rule in personal finance is to spend less than you earn. If you’re overspending and living off debt, that’s the first thing you need to address. Cut up store cards and prioritize paying off those accounts.
Save up for big expenses instead of buying on credit. Tools like FinWise can help you get a handle on your spending and control 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 in an account that earns enough to beat inflation but also allows quick access to your cash.
This safety net ensures you won’t need to take on unnecessary debt or dip into long-term investments if you suddenly need access to cash in an emergency. Understand and manage your savings rate.
Mastering personal finance strategies
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 key concept among financial planners. One of the most impactful things you can do to grow your long-term wealth is to figure out your personal savings rate and aim to increase it a 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. For long-term savings, make sure you take advantage of a Tax-Free Savings Account (TFSA) that enables you to invest in the market, such as shares.
A TFSA is a great way to invest for the long term in South Africa as all of your growth is tax-free. Low fees, trusted funds, and an intuitive platform can help you start working toward your financial goals today. Review your insurance.
Life changes and your insurance policy should reflect those changes. Whether you’ve gotten married, moved house had a baby, or launched a business, 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.
Don’t just accept annual premium increases without a fight; ensure your coverage and costs reflect your current needs. For more on financial advice, visit Fynbos Money.