Five tips to get financially fit this year
Now is a good time to assess your financial fitness.
The new year is here and the number of panting joggers, lycra-wrapped cyclists and cars in the gym parking lot suggest that plenty of us are working hard to lose a bit of flab after the festive season.
“Given the financial impact of the past eight months on just about everyone, it’s also a good time to think about your financial fitness,” said Nokulunga Mthembu, a product owner for Pulse, a credit rating platform from financial services provider DirectAxis.
“Just as getting back into physical shape after the lockdown will provide long-term health benefits, a good financial workout will get you ready for the year ahead and will literally pay dividends over time.”
Another reason now is a good time to assess your financial fitness is because you may had to make salary sacrifices during December and wasn’t able to rely on an annual performance or Christmas bonus.
To carry on living the same lifestyle with less money is the financial equivalent of eating poorly, drinking and smoking and ignoring the health risks.
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Here are five tips to improve your financial wellness:
1. Set some goals
It is important to be realistic and to have a lifetime for achieving them. If you have never run more than 5km, it is unrealistic to think you will be able to run a marathon.
You will need to build fitness over time until you are ready to run 42km.
When setting your financial objectives, start with a series of achievable goals rather than trying to take on a huge challenge and getting disheartened.
Once you have won a few small victories, such as settling and closing and unnecessary account, you can set bigger goals, such as saving or investing money each month.
Some financial experts recommend the 50/30/20 rule as a guide on how to prioritise your spending. It suggests using 50 per cent of your income on essentials such as food, rent or paying your bond, spending 30 per cent on discretionary expenses such as clothing and entertainment and then saving or investing the remaining 20 per cent.
“While this is not possible for everyone, particularly given the circumstances in which some of us now may find ourselves, consider it as a guide, something to strives towards,” Nokulunga said.
2. Get financially literate
This means acquiring the skills and knowledge that allows you to make informed financial decisions.
There is plenty of easy-to-understand, free information available online, including www.directaxis.co.za/make-a-plan/all Start by finding out more about things that affect your day-to-day financial affairs.
For example, understanding insurance, getting the most from your medical aid, reducing your cellphone costs or saving on electricity.
As you find out more you can expand your knowledge and learn about investing or what compound interest is and how it can work against you or in your favour.
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