By Sydney Sekese, CFP® professional and FPI 2016 Media Award Winner
As I write this article, South Africa is faced with many challenges. The latest drawback being the announcement by Stats-SA that the economy had contracted by 0.7% for the quarter ending June 2018. The first quarter growth was already negative at -2.2%. This experience is known as a technical recession where an economy suffers two consecutive quarters of negative economic performance. In short, it implies that the economic activity of a country is declining. A shrinking economy puts all citizens under pressure in many fronts, especially with regards to financial constraints. This is never a good thing. In South Africa’s case it’s particularly serious because the country needs strong economic growth to make inroads into unemployment, which currently stands at more than 27%.
The month of September brings an opportunity for most of us to “spring clean” our finances. This is no time to panic, it is an opportunity to put your financial house into better shape. On the other hand when spring hits, we can momentarily lose our money management mind and our focus on good spending habits.
At this time of the year your annual review should be part of your steps towards achieving financial goals. This will assist in avoiding knee-jerk reactions caused by unpredictable and untimely events similar to the recession challenges mentioned above. This is the time when you and your financial planner should be sitting down for a holistic discussion on your progress against your financial action plan. Typical questions to ask your planner include:
- Am I on track to reach my goals?
- Are any changes necessary? Why, or why not?
- Do we have the same expectations?
- Is there anything I need to know or understand from an investment perspective to assist me in making changes to my financial plan?
- How often should we meet and who will set up these meetings?
Having a meaningful conversation with your planner also helps to cement the trust and confidence needed for a healthy working relationship.
Having said that, you also have the responsibility to take proactive steps and be accountable for your own financial success. A financial introspection is necessary in September. This will keep you on track and alleviate potential financial traps as we approach the “silly” festive season.
Provided below are self-help tips you can adopt:
- Know your numbers – Knowing how much debt you have is the first step to chipping away at it
- Get your annual credit score – This will make you aware of any potential risks and opportunities that you need to be aware of.
- Clean up your accounts – Ask yourself if you need to have more than one credit card
- Do you have an emergency fund in place? The fail safe rule for savings is to have at least three months’ worth of cash for emergency
- Budget – Revise your budget, be sure to free up funds to cover increases in petrol and food prices
- Estate planning- Review and update your will
Spring is all about new beginnings. It’s a time of renewal, and the perfect chance to ditch bad habits and create new ones. If you want to stay on track this spring, it’s wise to get on a budget and stay on a budget. Don’t let the warm weather lure you into spending more than you planned, and don’t try to keep up with the Joneses, or Motsepes and their new cars, lawn furniture, or wardrobe. The temptation will always be there, but you’re the one in control. Use the warm weather to rejuvenate your dedication to financial wellness, and you’ll thank yourself later.