Make Spring a time to review your financial plan



Published Sep 7, 2020



In South Africa, September 1 is known as Spring Day, signalling a change in season. Many people have an annual spring-cleaning ritual – they get rid of old or unused items, deep clean the house and do some general reorganising. This year has proved to be anything but ordinary, and apart from performing this usual ritual, I challenge you to use this opportunity to take stock of, tidy up and spring clean your finances. Now more than ever, it is time to dust off your financial plan and reassess whether it requires some tidying-up.

Take stock

A good starting point is to take stock and make a list of all your assets, liabilities, monthly income and monthly expenses. That will provide you with a good indication of what your balance sheet and income statement look like.

  • Assets refer to anything that you own – for example, property, investments in shares, unit trusts and cash in the bank.
  • Liabilities refer to your debt, outstanding payments and loans – for example, your home loan/mortgage bond, car loans, student loans, and credit card debt.
  • Income can include your salary, rental income, interest and dividends.
  • Expenses include all your fixed expenses – for example, insurance payments, levies and medical scheme contributions – and variable expenses, such as groceries and electricity.

Budget, budget, budget

Once you have a clear picture of what your expenses are every month, it is much easier to set up a realistic budget. There are many budgeting templates available online if you get stuck. The key to setting up a successful budget is that you have to monitor how far you are deviating from your budget. Keeping track of your monthly income and expenses against your budget will provide you with a much better view of where your money is going, show you where you are overspending and/or where you are saving.

Spend what is left after saving

Now that you have observed your income versus expenses, you should have a good idea of how you are spending your money. When it comes to spending, Warren Buffett’s words will always ring true: “Don’t save what is left after spending, but spend what is left after saving”. Saving for a happy retirement or a rainy day may seem obvious, but it is much harder to put into practice. If you struggle to be disciplined when it comes to saving, set up a monthly debit order to an investment account and let it do the work for you. That way you are forcing yourself to save before you are tempted to spend the money. Here you can use your annual allowance of R36 000 for a tax-free savings contribution, or you can increase your retirement annuity contribution. No matter how small, the key is to start and stick to the habit of saving. For example, you can save R200 a month – all you need to sacrifice is buying about two coffees a week.

Have you invested appropriately?

As we enter different phases in our lives, our risk profiles can change. It is a good idea to take stock of all your investments and do an asset allocation check annually. Have you invested appropriately for your risk tolerance, time horizon, age and financial circumstances? Do you have enough offshore exposure? Perhaps you have been de-risking too much or taking too much risk. Speak to your financial adviser to adjust your portfolio to reflect your risk profile correctly.


A small word that often evokes big emotions is “tax”. What you can do as part of your spring-cleaning exercise is to get a professional to assess whether your financial plan is structured in the most tax-efficient way possible.

Insurance and risk policies

Part of reviewing your financial plan should be to ensure that all your short-term insurance, medical scheme and other policies (for instance, life cover, funeral cover, and disability cover) are still relevant and accurately reflect details about your circumstances and beneficiaries. Consider whether it is time to add or remove policies.

Your emotional well-being

Most definitions of financial health are very one-sided, focusing only on economic or financial stability. Ignoring your emotional well-being could be a recipe for disaster. Even investors with enough assets to withstand any reasonable economic shock can be anxious about their finances, which can cause behavioural problems and overall dissatisfaction. On the other end of the spectrum, some investors aren’t at a good place economically but still spend carelessly, ignoring the ramifications on their financial plan. To be truly financially healthy, you must find a balance between economic stability and emotional well-being. Being financially healthy is not only about having enough money to cover your expenses – it’s also about feeling emotionally at ease with your finances. People who feel empowered in their financial lives also experience more joy, peace and satisfaction.

In conclusion

You should review your financial plan with your financial adviser at least once a year (barring any life-changing events that might take place in between, such as getting married, having a child, or losing your income). If you haven’t done so in a while, don’t lean into the temptation to bury your head in the sand and ignore the issues that might exist – the solution is often more attainable than you think.

Debra Slabber, a Chartered Financial Analyst, is business development manager of Morningstar Investment Management South Africa.


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