The ideal time for a financial check-up

An annual financial “check-up” is important because so many things can change in a year. Assess whether your financial plan, your policies and your money habits are still in line with your life goals, which may have shifted in the last 12 months.

Whether it’s making sure your household insurance or life cover are up to date or reviewing your budget, follow this personal check list to ensure your financial plans meet your needs and goals, and make your money work hard for you in 2018.

Review your spending habits

Many of us started 2017 with good intentions to manage our money well, vowing perhaps to spend less on takeaways, open a tax free savings account or commute by public transport instead of by car. However, it’s all too easy to get sidetracked or distracted by other issues.

So before you enter the festive season, take some time out to review your money habits and get back on track. Here are a few tips:

• Review your bank statements and see where you’re spending those extra rands. Don’t look at the individual costs only. Look at total cost over time. That second coffee of the day might be only R25 but in total you’re spending R50 on coffee per day, which is a whopping R1 500 per month.

• Make a list of the top five things you can save on. For example, if you eat out three to four times a week, consider cutting it down to once a week.

• Download the 22seven app which categorises your spending automatically to give you an idea of where your money goes daily, weekly and monthly. It also creates a budget with goals to help you curb overspending.

Got a plan? Stick to it

Personal financial management starts with drawing up a budget. However, as important as creating your budget is actually sticking to it. Using a budget will give you insights into how your income and expenses fluctuate over time. It will also help you see whether you’re making your money work for you or the other way around. To help you stay committed, follow these steps:

• Create a monthly auto-reminder on your phone or set aside a recurring time in your calendar to review your budget.
• Choose a regular date, preferably before pay day, but after you’ve had a view of your income for that month. For example, if your payslip is available on the 20^th of each month and you’re paid on the 25^th, set aside an hour or two on the 23^rd of each month. Keep this time sacred – you’re investing in you.
• Use a free online budget template or set up your own. The most important part of any budget is listing your income and your expenses and then deducting the latter fromthe former. This simple sum can give you powerful insights.

Life’s a journey and goals are your pitstops

Don’t wait until December to take stock. Before the frenzy of the festive season kicks off, sit down and consider your goals and the time horizon for achieving them. Short term goals could include paying off your credit card debt, creating an emergency fund or sticking to your budget.

Medium term goals may be to save up for a deposit for a new car or home or helping your parents achieve an overseas trip, while your longer term goals could be saving enough for your retirement. Take some time out to reflect on your personal and financial goals and make sure you have the right plans and timeframes to achieve them.

When life changes, update your policies

If you’ve experienced any major life changes, like marriage or divorce, a new addition to the family or responsibility for a frail family member, make sure your policies are updated accordingly.

It’s easy to get wrapped up in the moment of life-changing events and forget to make amendments that reflect where you are now in your life. Here are practical tips to make sure your policies are on track:

• If you’ve had a change in assets or if their value has increased or decreased significantly, make sure you update your policies, including your short term cover.

• Review your beneficiary lists, including those in your will, and ensure they are in line with your wishes.

• If your medical status has changed, let your adviser or insurer know as soon as possible so that your underwritten policies can be updated (eg life cover policies).

• Changes in personal circumstances are just as important. If your surname or physical address has changed, your risk profile has also changed, hence the need to keep your insurer or financial adviser updated. The same applies if a family member has started driving your car or moved into your home. Also, remember to store your updated documents in a safe place and keep certified copies of the most important documents such as ID documents, passports and driver’s licences.

Year-end gives you the opportunity to reflect and set up a review meeting with your financial adviser. If you don’t have one yet, today’s the day to contact an accredited financial adviser who can help you make 2018 a great money year.

Soré Cloete is senior legal manager at Old Mutual Personal Finance.

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