Happy new year, and happy financial planning. It’s that time of year when we make lots of promises and then slowly realise that we can’t live up to them. So my financial promise for the year is that I will set realistic goals, with clear action plans! I started by reflecting back on the financial goals I set last year. Some of you may remember my column in May where I articulated five financial goals, some of which I have met. I put an extra 10% into the bond every month, changed the policy for my children’s tertiary education and managed to pay off my credit card every month. Others I was less successful with – but three out of five is not bad.
I am assuming that this year is going to be a very hard year financially. Let’s anticipate an interest rate increase, food price hikes, and higher inflation. I am sad already. I guess this calls for even smarter planning and spending. This will need to be a very frugal year.
My realistic goals will be:
- Continue to pay an extra 10% into my bond monthly. As the interest rate increases this will need to as well.
- Live within my means. What I earn each month is all we have to spend. If we don’t have the money we can’t afford the item.
- Save for emergencies. Last year nearly every month had an emergency: burst water pipes, new car tyres, medical bills after the medical aid had run out, crashed computers. My budget is now going to include “emergencies” as a line item!
- Continue with our “Fun Money” envelope. It’s a great way to control our expenses and is really teaching my children about money.
Additionally, I will try to be more frugal by avoiding:
- Using my credit card. Last year I really began to appreciate how powerful it is to use cash. It is a more honest relationship to your money. You actually feel the pain of paying big bills, are more aware of where your money goes and how much you pay for each item.
- Gourmet food. There is so much delicious food out there, but it is expensive. We really need to shop in the cheaper shops and consider the prices. Artisanal and gourmet food really is at gourmet prices.
- Expensive fun. We have the beach and parks which are free and we will be using them lots!
In my next column I will build on this thought with reflections on my budget for the year. The budget is going to be tighter and I need a plan for that. I also have some budgeting lessons from last year that I will reflect on.