Making financial resolutions work in 2023It is incredible how many people make resolutions about getting themselves into shape when a new year begins. Very few of us, think about the ‘financial hangover’ that we are dragging into a new year and how much getting personal finances back in shape could benefit our lives.
But, as in past years, many Namibians will emerge from fun-filled festive seasons into 2023 knowing that finances will be tough at the start of the year, says Mignon du Preez, Marketing, Public Affairs and Sustainability Executive at Old Mutual.
“The reality is that our money problems will last a lot longer than that resolution to spend more time in the gym. The irony is that if we were disciplined and spent a little while with a piece of paper and wrote down financial resolutions that stuck, we could be getting our finances into shape for years to come.”
“The art of making financial resolutions that work lies in being disciplined and focused, getting back to basics and taking steps to build a sustainable financial future,” says Du Preez.
The steps needed to improve long-term financial health are:
1. Knowing what you owe
Getting financially fit cannot begin until you know what your debts are. Listing loans, credit card debt, account balances and other debts is the step that identifies how big the job ahead will be. This is vital as it can help avoid further debt thus having a long-term impact on your credit rating.
2. Stopping all unnecessary spending and accounts
Once you know what you owe, you should stop spending on items you do not need. Closing unnecessary accounts will reduce your spending, even though there could be fewer luxuries in the house.
3. Consolidating your debt
Consolidating debt into a single account means simplifying your payments and ensuring you only have one major payment to focus on. Though, for this to yield the much-needed results requires you to be disciplined and avoid taking up further debt until you at least pay off your consolidated loan.
4. Downscaling your lifestyle
Changing financial habits will involve taking tough decisions. However, deciding to keep your car for another year, cutting back on restaurant visits and reducing spending on luxury items will have immediate benefits.
5. Seeing bonuses in a different light
It is tempting when a financial windfall comes your way to see the income as ‘extra’ and spend it. However, any bonus or gift you receive will work for you if it pays off accounts or kickstarts a savings plan.
6. Becoming a poly-jobber
Poly-Jobbers are people who have more than one primary source of income and use their skills to create second incomes. These poly-jobbers often take on projects offered on the web. The advantage is that the time required for the task and rewards are negotiated upfront. One should, however, always disclose this to your primary employer to ensure trust and transparency.
7. Not panicking
The worst thing to do is panic. You could damage your future security by cancelling life and insurance policies or liquidating savings or investments. Life, funeral, and short-term policies protect you and your family from the unexpected. Raising your risks by using money from these sources will offer only short-lived advantages.
8. Becoming a saver
Developing a new personal budget will ensure that more money can be paid into a savings account. You will then have funds for emergencies and short, medium, and long-term savings plans.
9. Getting expert financial advice
Expert knowledge and advice can be effective when making a fresh start. A personal financial adviser will assist you by reviewing your budget and developing strategies to help you meet your financial goals. As these strategies will be reviewed regularly and adapted, you can be sure that your savings and investments will continue to grow.
“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.”