Spring is in the air, and what better time, while possibly decluttering your home, to “spring-clean” your finances? There are three major steps involved: getting all the information together, deciding what needs to change, and taking action.


• Know what you spend. Review your bank statements for the last three months and determine an average expenditure per month. Focus on 80 percent of the money and don’t get tied up in the small amounts.

• Take note of what your income is. Review your total income and ensure that your total spend is less than the income.

• List your assets and liabilities. Your assets will include the larger items like house, car, boat, second property. (Don’t worry to include furniture and sports equipment here). Your liabilities are amounts owed to the bank or others and will include your home loan, car finance owing, other personal loans, and amounts owing on credit cards and store cards.

• List the value of your investments. Listing the value of your investments will show how far you are in becoming financially independent. This will include your pension fund, preservation funds, retirement annuities, unit trusts, cash deposits and any other investments.

Also, calculate how much you are investing on a monthly basis. Although the savings rate is different for each person, this should be between 10 and 15 percent of your gross income.

• Life assurance – dare to take a look. You want to know how much insurance you have:

- If you die;

- If you become disabled; or

- If you suffer from a critical illness which will affect your ability to earn an income.

You also want the details of your medical scheme package.

• Find your short-term insurance policies. Sometimes cars and houses are insured on separate contracts – make sure you get them all.

• Your estate. Get a copy of your will.


• Spending. Review each expense item and decide if it can be optimised or eliminated.

Debit orders are something to take a careful look at.

Plan for seasonal extra spending over Christmas and holidays.

Insurance is a wasted purchase if it is not needed. This should be reviewed regularly.

• Assets and liabilities. Compare these to last year and make sure you are going forwards, not backwards.

Try to eliminate the use of store cards and any short-term debt.

When deciding to eliminate debt, pay off all the smallest accounts first, to feel the speed of progress; otherwise pay off the debt with the highest interest rate first.

• Investments. Where is your money invested and is it diversified?

Review your asset allocation and your offshore exposure.

Are you making use of the available tax breaks? Have you considered a tax-free savings account?

Are you saving enough to be financially independent when you can no longer work?

• Life assurance. Make sure you do not have more life assurance than you need. This changes over time.

Adjust your disability cover in line with your income. With recent changes in tax law, you may be able to reduce it and save on premiums.

Consider even a small amount of critical illness (also called dread disease) cover. The occurrence of cancer/heart attack/stroke is very high and you would need the financial relief.

Review your medical scheme benefits and ensure they still fit with your requirements. You can downgrade any time, but you can usually only upgrade each January.

• Short-term insurance. Is the value of your house correctly insured? Have the values of your cars been depreciated so you are not over-insured? Has all the new furniture been added to the value of your home contents? Do your security arrangements comply with the policy? Have you removed all-risks items that no longer need to be insured?

Consider gap cover to cover the difference between hospital expenses and what the medical scheme pays.

• Your estate. Read your will and ensure it still fits your circumstances.

Check that the beneficiaries on your life policies, your pension fund, and your retirement annuities are all listed and still appropriate.

Assets will help your loved ones in event of the unthinkable.

Many people don’t have a will. Have one properly drawn up, or use the free will template available at http://www.financialplanningsouthafrica.com/free-resources/


A review won’t help unless you take action. You need to implement what you discover during your spring clean.

List the items that need attention and diarise their implementation.

A professional financial planner will add value to your financial life: consider finding one.

• Ian Beere is Managing Director of Netto Invest, Cape Town (2007 Financial Planner 
of the Year)