A year of finances: Here's a month-to-month guide on how to manage your money

Making financial improvements for each month in a year will allow you to enhance your financial outcomes, says the writer. Picture: Freepik

Making financial improvements for each month in a year will allow you to enhance your financial outcomes, says the writer. Picture: Freepik

Published Aug 25, 2023

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By Rita Cool

By making one financial improvement each month, you can enhance your financial outcomes and build a strong foundation for the future.

Here’s a monthly breakdown of practical tips to help you achieve your savings goals.

August – consolidate your investments

Combining or consolidating your investment products could reduce costs. If you have a retirement fund from your employer, explore the option of adding preservation funds from previous employers or redirecting any retirement annuity contributions towards your fund.

Employer funds typically have lower costs compared to personal investments, allowing you to save on costs without spending more and thereby potentially increasing long-term benefits. Consult your adviser to discuss the available options.

September – emergency funds

It’s wise to have savings that you could easily withdraw to deal with unexpected emergencies. Aim to save three to six months of your income in your bank account or even in your access bond.

By having emergency funds, you won’t have to rely on debt to cover unforeseen expenses. Remember not to dip into long-term savings for emergencies.

October – tax submission

Prepare and submit your personal tax returns on time to avoid penalties. If you have been working from home, get a letter from your employer to claim qualifying expenses.

Make sure you comply with home office requirements and understand the potential impact on capital gains tax when selling your house in the future. Keep track of expenses like electricity and fibre costs that can be claimed as a proportion of overall household expenses.

November – tax refund

If you receive a tax refund, consider using it constructively. If you haven’t contributed to a tax-free savings account (TFSA), use the refund to save for your future. The growth on TFSAs is tax-free and offers flexibility for different goals.

Alternatively, use the refund to make a significant purchase without resorting to debt or allocate it towards debt repayments. If you have debt, don’t change your monthly repayments; this will accelerate your journey to a debt-free life.

December – planning and budgeting

Take time this month to reflect on the past year and set goals for the upcoming year. Review your budget and cash flow, considering occasional expenses such as car registration fees, haircuts and birthday presents.

Anticipate more expensive months and include holiday expenses in your budget. Proper planning and budgeting will help you stay on track and avoid financial pitfalls.

January – tax season

Make the most of tax benefits before the end of the tax year at the end of February. Contribute more to your employer fund or retirement annuity to maximise tax benefits. You can contribute up to 27.5% of your taxable income to retirement funds, with a yearly limit of R350,000.

February – financial goals

Set short-, medium-, and long-term financial goals for one year, three years, and ten years or more. Look at goals like saving for a holiday, a house deposit, or university fees, as well as retirement goals. Define timelines, track progress, and establish requirements for achieving your goals.

March – stretch your rand

Review your budget and identify areas where you can reduce or revise expenses. Assess your insurance for opportunities to optimise life, house, car, and other insurance.

Cancel any automatic subscriptions you no longer use and monitor spending on in-app purchases. Avoid withdrawing cash from non-affiliated banks or using credit cards for cash withdrawals, as these often incur high costs and immediate interest charges.

April – social saving and spending

Be kind to the environment and reduce expenses by reusing and recycling. Sell unwanted items to free up cash, and consider swapping or sharing items like children’s clothing or outfits for special events. Explore solar energy options to reduce reliance on coal-based electricity.

May – debt management

With rising interest rates, managing debt becomes increasingly challenging. Make regular monthly repayments and promptly address any potential issues with your bond provider to prevent problems.

If you have available cash, allocate it to repayments to reduce debt faster. Begin by targeting high-interest debt, such as credit card or store credit, to maximise the benefits of additional payments.

June – financial health check

Halfway through the year, schedule a meeting with your adviser to conduct a financial health check. Review your will, investments, and insurance. Assess if any changes in your circumstances warrant adjustments to your insurance for your and your family’s financial protection.

By incorporating these monthly financial tips, you can establish a year-round savings mindset. Starting with year-end planning and progressing through various areas of personal finance, you'll develop healthy financial habits and achieve your financial goals.

Make this the year you prioritise savings and secure a brighter future.

July – year end planning

Take advantage of early planning for the year-end. Instead of waiting until December, start your holiday preparations now. Book your holidays in advance, buy gifts on sale, and save your store rewards points for year-end expenses. By planning ahead, you avoid last-minute stress and could save money.

Rita Cool, head of individual consulting strategy at Alexforbes.

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