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Your annual financial planner

By | January 16th 2010 at 00:00:00 GMT +0300

New years are symbolic in a lot of ways; but mostly because they are an excuse for us to give ourselves a fresh start. This year’s no different. In fact, with all the tribulations that we went through last year with inflation, global financial crisis and generally being financially strained, a fresh start is welcome.

Remember that every opportunity to spend also presents an opportunity to save.

Shedding guilt

Each of us will remember some point at which they dropped the buck, or made some bad decisions, the repercussions of which they may still be suffering. Even though letting go of bad judgment where money is concerned is easier said than done, it’s very important in aiding a fresh start. Adopting a no blame attitude is especially important where couples are concerned. Work together to purge yourself of any guilt or shame you may be holding onto and do away with the finger pointing or fighting.

Start small

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So you didn’t manage to save as much as you had planned to last year — or you didn’t save at all for that matter. That’s fine. The plan right now is to make sure you start putting some money away. One of the best ways to do this is to take your total expenses (excluding fixed payments like rent and mortgage), multiply by 10 per cent and put this into a checking account. Checking accounts are perfect avenues as the money does not reflect in your net paycheck and there’s no chance of spending it before you can save it. After doing this, you will have to force yourself to cut down your expenditure by 10 per cent to make up for the difference. Cut down on entertainment, eating out, movies and family outings. Remember that every opportunity to spend also presents an opportunity to save.

Stop giving away free money

Every time you pay your utility bills after the due date you get surcharges or penalties. This applies also to credit cards and bank overdrafts. Allowing yourself to pay a penalty, surcharge or interest is doing yourself a great disservice. Do what you need to do to stay on top of your bills. Automate cheque payments, account freezes or account debits to make sure you never pay another late bill, ever.

In the same way, if your organisation has the option of matching a contribution you make to a registered pension fund, take advantage of it. This creates the opportunity to save and takes advantage of free money from your employer at no extra cost. What could be better than that?

Self discipline

Even the best intentions have a way of going awry if some discipline is not involved. If you have identified a bigger goal to work towards say, a family vacation at the end of the year or a high priced item for purchase, focus on why you need to make the small steps in order to fulfill the end result. Having something positive to look forward to helps to make short term sacrifices bearable. Having some form of reinforcement also helps; be it a monthly reminder of the anticipated vacation or some visual tool. Small rewards for achieving your goals and following through on your commitments every, say, three months can also be considered, as long as they do not go overboard or jeopardise your long term plans.

Protect your money, and your family

All the material possessions that you’ve worked hard to garner should have some sort of protection; insurance. But even more important is protecting your spouse, children and any other dependants. Life insurance is extremely important, especially if you’re a breadwinner, as is a last will and testament, and an emergency fund.


Financial planning Saving
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