Ten ways to keep your money promises to yourself this year

We all know that New Year’s resolutions rarely last a month, let alone a year. So forget those resolutions, and start making promises to yourself. Here’s how to make sure they’re on the money

One year a friend of mine decided to change “New Year’s Resolutions” to “Promises to Myself”. I guess the idea was to make it more meaningful and personal, thereby creating more motivation to stick to the plan. However, despite changing the name, none of her resolutions lasted. Instead of breaking a resolution, she was now breaking promises to herself which just made her feel worse.

I have given resolutions a lot of thought and realised that we break them because they are usually too ambitious. A New Year’s resolution that says “I am going to cut out sugar, bread, wine, coffee and chocolate, exercise five times a week and get to my goal weight by April” is bound to fail. “I am going to only drink wine when I am out, exercise twice a week and have chocolate once a week” is probably  more realistic.

The same applies to financial resolutions. Aiming to be debt-free by the end of the year or to make your first million will probably be off the rails by March. My strategy is to select a few easy to implement financial changes which still have an impact. These will all depend on what your current priorities are.

In January 2017 my priority was to get my paperwork in order. I created a spreadsheet of all my bank accounts, investments and risk cover, including companies and account numbers so that should something happen to me, my family has one piece of paperwork to show them where everything is. In undertaking this task, I came across an old statement for a preservation fund I had forgotten about. I had moved in 2010 and had not updated my address.

Once I tracked them down I discovered the investment had grown from R40 000 to R100 000. I was able to transfer this to my retirement annuity and boost my retirement provision with money I didn’t even know I had!

By setting goals each year, in the last few years I have hit my target of having four months’ worth of expenses saved in an emergency fund, opened tax-free savings accounts for my children, reviewed and improved my life cover, decreased my short-term insurance by shopping around, had an assessor ensure I was correctly insured and maximized my reward benefits by understanding how to use them.

My current resolution is to update our wills, which we last reviewed 12 years ago when my second son was born. A lot has changed since then and we need to ensure that it not only reflects our current reality, but has also kept up with tax changes.

If you are looking to kick start 2020 here are some ideas, depending on your priorities:

• Pay off a debt – even if it is just a single store card, and then close the account.
• Start an emergency fund. The aim is to reach at least three months’ worth of living expenses, but opening an account with R10 000 is a good start.
• Write up/ review your will. This should always be a priority, but if you have a family it is a necessity.
• Open a tax-free savings account – if you want to start investing, a tax-free saving account is a no-brainer. Why pay more tax than you already do?
• Write up a list of all your bank accounts, policies and investments. You may find money you forgot about.
• Do a proper household insurance assessment. If you have a broker they offer a service to come to your house to itemise your belongings. if you are DIY, list of all your items for your insurer, including cellphone makes and models. Get your jewelry valued too.
• Analyse your reward programmes. Select a few that you use often and work out how to make the most of them.
• Spend time understanding your medical scheme. It may be too late to change benefits now, but at least know what you are covered for and where the short-falls may be. Consider getting gap cover to meet those short-falls.
• Review your life cover. Make sure that at least your debts are covered as well as children’s education.
• Check your bank statements. Find out how much you are really spending and on what. Is that ‘eating out’ bill getting out of hand?