It’s important to set clear financial goals well in advance to avoid being reactive and spending sporadically without a plan. Photo: File

DURBAN – It’s important to set clear financial goals well in advance to avoid being reactive and spending sporadically without a plan.

Pieter Woodhatch, Chief Executive of FNB Easy, said, "Facing up to one’s financial situation is not the easiest of tasks, especially when things are not looking good. Having come out of the festive season, it’s possible that some may have misspent their hard-earned money on festivities. The beginning of the year is an opportune time to look back at financial mistakes committed in the past and move towards a new approach". 

Woodhatch added that getting your finances in order takes a lot of commitment and dedication, it’s not a once off exercise, and it may require facing some hard truths about your spending habits.”

Here are a few questions to ask yourself to when relooking your financial position:

Are you in a financial dilemma?

The ideal situation is being able to track where your money is being spent and what you are spending on. If you are unable to track your expenses, even the smallest amounts, then it’s time to pause and take a proper look at where your money is going and if it’s being spent wisely. This is the only way to put a lid on wastage.

Do you have financial goals?

Set financial goals and put a timeline to accomplishing them. For example, you may want to devise a plan for settling all or part of your debts or start saving. It all depends where you are now and where you want to be. While it’s good to set goals, following through is important – you must commit to your goals.

Do you give into societal pressure?

One of the reasons some people never have a firm grasp on their finances is because they succumb to societal pressure. Understand your personal financial aspirations and work towards them, never try to mimic the lifestyles of others because everyone’s personal circumstances differ. Have your plan and stick to it. For example, never approach a lender to borrow just to finance your lifestyle needs instead rather borrow to finance education or home improvements.

Can I avoid wastage?

Sometimes it can be difficult to spot wasteful spending simply because once you have fallen into the habit of frivolous spending it’s hard to stop and take note. The most effective way to identify wasteful spending is to have a budget in which you record expenses, both fixed and unfixed. A budget will help you to have a clear sense of where your money is being spent and enable you to pick up areas where wastage occurs.

Do you have a funeral plan?

Funeral policies are taken to ensure that in the event of the death of a loved one you won’t have to resort to borrowing or tap into your savings. As a first step, assess your needs and the type of cover you would require as this would largely influence the premium you pay towards the policy every month.