Spring - time to take stock of your finances

There’s something about the change of season that makes people want to make positive changes in their lives. So with spring just around the corner, you too probably have a few things in mind that you would like to overhaul – your wardrobe, your body, your attitude, and what about your finances?

“Typically, we all start off the New Year with good intentions to spend wisely, avoid buying on credit, pay off our debts and save a bit of money. But, by this time of year, those resolutions are nothing but a distant memory for most of us. Many of us still have debt we haven’t paid off, we are still using our credit cards a little too frivolously, and the notion of saving any money is out the window.

“However, it is not too late to pull in the reigns so that you can end off the year on a financial high, as you originally planned,” encourages 1st for Women’s managing director, Robyn Farrell.

She advises consumers to first take stock of where they stand by checking their bank balances, outstanding debts and credit cards.

“This can be a pretty scary undertaking, especially if you have never looked at your outstanding debts as a whole, but it is important to have a clear picture of the state of your finances. You need to know how much you’ve got and how much you owe before you can even start planning how to improve your situation.

“It is important to have a goal. Even if your finances don’t look as bad as you thought, there’s always room for improvements, like paying off your debts or to have a certain amount of money saved by the end of the year,” Farrell says.

The next step is to draw up a list of expenses and sort them into two categories: essential debt (food, transport, water and lights, rent/bond, school fees, short and long-term insurance) and non-essential debt (cell phone, memberships and subscriptions, clothing accounts, furniture accounts, credit cards, entertainment, rental contracts).

Drawing up a list of fixed expenditures and other monthly deductions and tallying these up against your income can also be an eye-opener, particularly if you are spending more than you earn. However, a simple budget like this is a valuable tool for identifying where you are leaching cash. The chances are that you are wasting money without even knowing it.

Once you have created your list, you can begin to work through the items to see where you can cut back, starting with the list of non-essential expenses first. You must be quite aggressive about cutting back on non-essential debt as this is where you are realistically going to be able to save the most money.

If your financial situation requires drastic cost-cutting measures, you will have to be more aggressive, and you may have to look at reducing your essential debts. This isn’t always easy but it is possible to elicit savings by for instance, re-financing your home, looking for a cheaper home to rent or entering a lift scheme to cut travel costs. You could also shop around for cheaper short-term insurance.

The extra money you have at the end of each month can be used to pay off your outstanding debts and for savings purposes. It can be done!

Farrell concludes: “If you lost your way somewhere between New Year and now, you can still achieve the financial goals you set for yourself. Consider a financial spring clean as an opportunity to get your finances back on course. It will put you back in control and make you feel empowered.”