Get ahead of the game: Creating a financial plan for the next year
Whether you want to save for a big purchase, pay off debt or build your emergency fund, planning ahead can help you achieve your goals and make saving easier. There’s no need to wait for the new or month to start thinking about your goals or creating a plan for achieving them.
Doing so can keep you from overspending during festive and holiday seasons, helping with the financial stress of the back-to-school season and feeling like you need to ‘catch up’ on your savings halfway through the year.
Being intentional about how you will enter a new financial season and setting your plan in motion before then can help you get ahead of the new year/month/week rush and set you up for success.
When is the best time to start planning?
Starting right now is as good a time as any. Instead of putting it off until the beginning of a new period in the year or your life, setting a financial plan in place at the end or in the middle will put you in a better position for ‘the next period’.
Doing so takes away the pressure of having to start at a specific moment and the overwhelming feeling that comes with a new year, month or week so that you can deal with it without worrying about your finances. It also helps ensure a smooth transition during those times when we’re prone to overspending, helping to set you up for financial success instead of stress.
When you’re planning for the next year, remember to do the following:
Set realistic goals
Your goal should be specific, measurable, achievable, relevant and time-bound (SMART) as this will help you stay focused and motivated throughout the year.
Create a budget
A budget helps you align your spending to your financial goals. To stay on track and identify more areas for creating savings, you need to know exactly where your money is going.
Open a dedicated account
Putting your savings into an account not only helps grow your money but keeps it separate so you’re not tempted to dip into it and spend it.
Automate your savings
Set up a direct debit from your account into a savings account each month so you don’t even need to think about it.
Maximise your money with a tax-free savings account
Take advantage of earning interest without the taxman affecting your money’s growth. You can save up to R36 000 per year or R500 000 over a lifetime without paying tax on the interest earned in that account*.
Track your progress
Regularly review your budget and how you’re tracking towards your goals. Progress is motivating, and celebrating the small wins will give you confidence and momentum to continue.
Make it a game
Remember, every bit counts, so start small and keep building on your savings over time. If you’re looking for easy ways to get into a savings habit and help accelerate your savings growth, try one of these challenges.
The 52-week challenge
You start small, saving a little more each week than the previous one, and as you progress, you get more used to saving and start seeing the effect, and it becomes easier to prioritise saving and set aside money.
| Amount put in savings | |
|---|---|
| Week 1 | R10 |
| Week 2 | R20 |
| Week 3 | R30 |
| Week 4 | R40 |
| Week 5 | R50 |
| Total at end of month 1 | R150 |
By the end of the year, you’ll have saved R13 780 just by adding a little more every week instead of having to save a lot at once. Putting this money into a high-yield savings account can help you grow it even more.
The pay-yourself-first challenge
To avoid having nothing left over to save, put aside a portion of your income before you pay any bill or expense. This helps you prioritise saving and ‘get it out of the way’ so that you don’t have to stress about how you’re going to save after paying for everything.
Start by deciding on a percentage of your income, such as 10%, that you’ll set aside before you spend anything else. The easiest way to stick to it is to automate the amount from your account into a savings account so that you won’t ‘feel it in your budget’.
The double-up challenge
This challenge will help you see what’s possible if you put your mind to saving. If you’re already saving or you want to start, set yourself a challenge of doubling the amount (or at least saving a percentage more) every month.
For example, if you usually saved R500 per month, in 3 months, you would’ve saved R1 500, but if you increase your savings to R1 000 in month 2 and increased it even more in month 3 to R1 200, then by the third month, you would’ve saved R2 700.
This is a great way to accelerate your savings goal and makes putting money aside more doable. When it’s incremental, you slowly get used to not only saving but pushing yourself to allocate more of your money (in your budget) towards your goal and getting you there faster.
*Terms and conditions apply.
Disclaimer: This article is solely intended for information. It does not constitute financial, tax or investment advice or recommendation. Please speak to a financial advisor or registered financial professional before making any financial decision(s).
Standard Bank, its subsidiaries or holding company, or any subsidiary of the holding company and all of its subsidiaries make no warranties or representations (implied or otherwise) as to the accuracy, completeness or fitness for purpose of the information provided in this article or that it is free from errors or omissions.