A financial kick in the pants

  • Prepare an itemised list of all your expenses and divide the expenses into Group A, being fixed expenses, such as car repayments, other debts and payments you are contractually bound to pay monthly. Other discretionary expenses you are able to reduce or even cancel without suffering any negative legal or financial consequences such as entertainment, clothing, cable TV should be included in a Group B.Select certain Group B expenses you wish to reduce or stop [that gym subscription?), do so and allocate extra payments to shorten the outstanding payment periods (and reduce the interest payable) of Group A expenses or start a small rainy day account for those unexpected financial surprises. Which expenses should be reduced and in what order of priority will depend upon circumstances such as interest rates, tax deductibility, outstanding payment periods and so on. Always a good idea to consult a professional to assist you in making the correct decision.
  • Make an appointment with your financial planner to verify whether your life, disability, dread disease and accident benefits are adequate or surplus to your needs and whether recent product developments have resulted in more cost efficient and/or comprehensive cover being available at the same or at a cheaper cost to you. Planners are, today, required to provide you with comprehensive comparative information to provide you with the peace of mind that you are making a decision that is in your best interest.
  • Create a filing system (whether it be a lever arch file or a folder on your desktop for emailed documentation) for all your financial records such bank or credit card statements, accounts and invoices. This will save an enormous amount of time when a payment is in dispute. If you have other important legal documents, why not also save these using a similar format?
  • Request your short term broker to review your insurance to ensure that your house, car and other property is sufficiently insured against damage or loss.
  • You will have, in all probability, already made a decision as to your medical aid plan for 2017. Speak to the medical aid consultant about so-called Gap cover to meet any possible shortfalls you may experience in the event of a medical emergency. These plans are relatively inexpensive and worth consideration.
  • Harass your banker for a better deal around your banking options. Is it really worth all those bank charges to have a Rolls Royce cheque account and credit card if you are not making use of all the benefits they offer? Consider a down grade of the banking package, at the risk of losing benefits you don’t use anyway but in so doing your bank charges may very well be substantially reduced.
  • Contact a credit bureau and request your free creditworthiness check, even the basic information provided by these reports can be an eye-opener. If there are there any adverse debt payment findings present on your profile, take steps to correct these by speaking to an attorney or the creditor responsible for the adverse record. Be particularly aware of possible instances of identity theft where your personal information and even identity number has been fraudulently used to obtain financing or credit facilities without your knowledge.
  • Assess your available credit facilities and, if necessary reduce the facility(ies) to a reasonable limit. For instance, having a credit facility to buy clothing for R50 000 may be flattering on your monthly statement but if you only regularly use R5 000 of the available amount the surplus R45 000 availability will negatively impact on the amount of any further credit you may apply for when wanting to purchase, say, a car or even a house!
  • Strategise your next vacation, it’s anticipated cost and save regularly in a separate investment such as a Money Market or Income fund type investment to fund the holiday. Your financial planner will be able to advise you as to appropriate investment options taking into account your personal circumstances, duration of the investment period, relevant amounts, costs and any risk that may be involved.
  • Consult with your tax advisor to identify any tax savings strategiesavailable to you. At the very least confirm that you are investing an adequate tax deductible amount in retirement annuity investments. A visit to your HR department to ascertain whether you can make an additional contribution to your pension or provident fund may also provide a tax efficient investment option.Take the information from your HR Department and your last tax assessment to your financial advisor and ask him to make proposals concerning your retirement annuity investment and/or any possible topping up of your pension or provident fund investment. Be very careful to assess the cash flow impact of any decision you make to increase contributions.

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