While getting your affairs in order for the SA Revenue Services, it's a golden opportunity to take stock of your finances for the past year and plan your financial and savings goals for the following year. This is especially important if you intend buying a home of your own.
Take into account changes in your job or salary as well as your household circumstances or lifestyle and plans to reduce debt and increase savings.
You should get everyone in the family involved. Even if you are responsible for the family finances, it’s a good idea to discuss the budget and financial goals with your spouse or partner and children once a year so that they are part of the process. You may be surprised at their innovative ideas for reducing spending and boosting savings.
Cut costs
One of the best ways to improve your financial position is to pay off debt before trying to grow your savings. This is because the interest charged on most debts is higher than the interest paid on most savings accounts.
If you will be applying for a bond to buy your home, you should be aware that one of the criteria lenders consider is your debt level. In terms of the National Credit Act, lenders may not grant home loans to applicants with high levels of household debt and insufficient disposable income.
To give yourself the best chance of getting your home loan application approved, you must honestly evaluate your debt load and start reducing it as soon as possible.
Work through each item in your current budget, such as utilities, transport, credit card and cellphone accounts, to see where you can cut costs. Then divert any savings into reducing your debt. This is where it helps to have the whole family working together to minimise expenses.
Insurance
Once a year, you should also review your household, vehicle and life insurance policies as well as medical aid, and make sure you are not over or underinsured. Make sure you know what you are getting for your money, and perhaps shop around to see if there are more suitable options.
Once your finances are sorted, ensure your budget and financial documents are properly organised and safely stored.
Keep a list of all bank and investment accounts, as well as insurance policies.
You should also have a complete inventory of all insured items in your home that you would need to replace in the event of a disaster. Include a list of furniture, appliances, clothes, certificated jewellery, artwork, firearms, and other valuables.
Make sure your spouse or another trusted person knows how to access these documents in an emergency.
Good luck with your budgeting.
Writer: Sarah-Jane Meyer