Five ways to spring-clean your finances
LETTIE Mzwinila, a business development manager at Allan Gray, has the following advice for reviewing your financial situation:
1. Evaluate your budget. Budgeting has negative connotations for many people, who see it as something that deprives them of spending. A budget is simply a plan for your money and is often a good place to start, as it shows you what you are receiving and what you are spending your money on. Creating a budget is the best way to help you allocate future funds optimally.
2. Review your debts. Compound growth works for you when you’re investing but can work against you when you’re borrowing, so make sure you review your debts too. Being in debt can feel like you are drowning and unable to come up for air. By reviewing your debt, you can prioritise paying off your most expensive credit first, so that you service your debt more efficiently.
3. Update your will and retirement fund documents.
Many of us overlook this important document. Having an updated will is a key part of having your financial affairs in order. A will should be reviewed and kept up to date, reflecting your current financial situation and chosen beneficiaries. If you do not have a will, use this opportunity to write one. You should also update the nominees listed in your retirement fund documents, so that the claim process is efficient, and your dependants are looked after, in the event of your death.
4. Check your insurance cover. It is a good idea to assess your insurance needs annually to make sure you are adequately covered for life’s eventualities. You may even find that you are paying for insurance cover that you no longer need and may be able to renegotiate and reduce some of your premiums.
5. Take stock of your investments. Checking your statements regularly and chopping and changing between investments is never a good idea, but every now and then it is a good thing to take stock of your investments. This may also be an opportunity to automate some processes, such as setting up debit orders if you do not have any in place.