Six tips for spring cleaning your finances

As the Winter chill thaws and the blossoms of Spring emerge, there’s no better time to clean up your finances. In the same way our homes come to life after a good spring clean, so too can our financial health.

According to Nidia Lourens, Senior Actuary at Metropolitan Life, with its spirit of renewal, Spring is always the perfect opportunity to reassess your financial goals and refresh your focus. This task can be especially challenging for those who lack financial literacy. With many buzzwords going around including ‘Two- Pot retirement system’, it’s never been a better time to ensure you are making sensible decisions when it comes to refreshing your finances.

In September, the world observes International Literacy Day, dedicated to promoting literacy as a tool for empowerment and economic growth. “This year, we should consider expanding the definition of literacy to include financial literacy,” notes Lourens. “This is a critical skill that not only enhances personal financial security but also contributes to communities and the broader economy.”

With literacy comes action, and with action comes literacy – but Lourens says we have to start somewhere and now is the best time to do it. According to S&P Global^[i], South Africa is sitting at a 42% literacy rate, which means that there is room for improvement. As we embrace the blooming energy of the new season, Lourens offers six practical steps to help declutter your finances and set yourself up for a prosperous future

• Groom your budget

Your budget is the foundation of your financial health. Start by revisiting it and identifying areas where you can cut back. Consistent budgeting ensures you live within your means and stay aligned with your financial goals.

• Refresh your financial goals

Spring is synonymous with growth, making it the perfect time to reevaluate your financial goals. Whether you’re saving for retirement, a new home, or your child’s education, ensure your goals are still relevant and attainable. Consult a financial adviser to help you set or adjust these goals.

• Plan for preservation

With the launch of the Two-Pot retirement system^[ii], it’s more important than ever to focus on preserving your retirement savings. This system allows you to access a portion of your funds during an emergency while safeguarding the rest for the future. Understanding how to navigate this system requires a solid grasp of financial literacy, so take the time to educate yourself and make informed decisions about your future finances.

• Review your insurance coverage

As life progresses, your needs change. If you bought a house, had a baby or your child is going to university, it would make sense to review your insurance cover. Have a look at your funeral cover, life insurance, and other policies to ensure they still meet your needs. Adequate coverage provides peace of mind and protects your loved ones from financial hardship.

• Tackle your debt

According to SearchWorks data, the average South African consumer allocates about 62% of their take-home pay to servicing debt. This is a difficult reality that makes it tough for long-term savings to grow. But just as a garden thrives when properly tended, your finances will flourish when you manage your debt effectively. Focus on paying off high-interest, low-balance debts first, and create a plan to tackle the rest. Debt management is crucial for long-term financial security.

• Save for emergencies

Whether you’re contributing to a retirement fund, investing in the stock market, or simply saving for a rainy day, growing your financial reserves is essential for future stability. An emergency fund is an excellent place to start and should ideally comprise of 3-6 months of your expenses. This ensures that you have reserves put aside if unexpected expenses arise.

As you work on your financial spring cleaning, Lourens emphasises that this is more than just a seasonal chore, it is an opportunity to refresh your financial health and sharpen your focus on what truly matters.

“By taking these steps, you can ensure your financial future is as bright and flourishing as the Spring season itself,” Lourens concludes.