The start of a new year is an excellent time for people to set new financial goals as well as create a plan to meet those goals in the year ahead.
It is crucial that people have an understanding of financial matters to make the process of setting those financial goals easier.
John Manyike, head of Financial Education, Old Mutual said: “The key to changing bad money habits and becoming financially strong depends on knowing the right way to preserve and grow your money. The time for change is now. To achieve remarkable things tomorrow means taking small steps to build a great 2023 today.”
Here are five tips to help people take control of their finances in 2023:
Be financially savvy
Knowing and understanding their financial choices and options is the first step that people take towards improving their financial wellbeing.
People need to educate themselves on the different financial areas that are relevant to them in order to get on the path of financial freedom. If they are unsure, there are free online resources that can be educational in regards to financial matters. They can also reach out to their banks for information that is related to money.
Draw up a budget
An important element of proper financial management is budgeting for expenses, paying off debt, as well as savings and investments.
Sebastian Alexanderson, Founder and Debt Counsellor at National Debt Advisors (NDA) said that budgeting was a great way for people to take control of their finances.
“When you budget, you know exactly where all your money goes, where you can make adjustments to save even small amounts, and also how to effectively save and leave enough money for unexpected expenses and emergencies,” Alexanderson said.
To start your budget, list your expenditures, monthly deductions and income. If the total expenses add up to more than what you earn, you need to cut down your spending.
Get rid of debt
You can consider using any extra cash or a financial windfall towards paying your debts instead of splurging on expensive luxury goods and non-essential items.
Becoming debt free is an essential part of financial freedom. and it will allow people to put that money that they have freed up towards savings and investments.
Farzana Botha, Segment Solutions Manager at Sanlam Savings, said whether it’s an inheritance, a bonus, investment returns or winnings from a competition, any extra income should be put towards paying off debt.
Make your money work for you
After taking care of their monthly expenses, people need to set aside a certain amount for savings and investments. This money can be put aside for a big goal such as a holiday or education, or it can used for a rainy day or to take care of expenses due to loss of income.
Remove in the clutter in your expenses
Lots of people may have unnecessary debit orders lurking around their accounts.
Therefore it is vital that people re-evaluate their fixed monthly expenses on memberships, subscriptions, and insurance.
There may be memberships and subscriptions that are being paid for but are not in use at the moment. People should also take a look at their insurance policies and get it updated according to the changes in their lifestyles.
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