Too many new year’s resolutions, particularly when it comes to finances, can be overwhelming and unrealistic, leaving many feeling disappointed and demotivated only a few weeks into the start of a new year. Rather than attempting to revolutionise your finances in the space of a single month, it may be more beneficial to space your financial planning over the course of a calendar year, committing each month to a specific area of your finances – and in doing so, relieving unnecessary pressure and spreading the workload in more realistic, bite-sized chunks. In this article, we’ve proposed a financial planning calendar for 2022 which can easily be customised and adapted to meet your specific circumstances.
With the festive season behind you, now is the time to take a stock of your monthly budget going forward and to set the framework for your expenditure going forward. Living within your means is the key to wealth building, so adjusting your budget to ensure that you can contain your living expenses to well within your means should be top priority. Use the opportunity to take advantage of upfront discounts offered by institutions such as daycare facilities, schools, universities, clubs, and gyms to reduce costs and allow for more accurate forecasting. If you have credit card and/or retail debt in place, put a debt reduction plan in place so that you can map a clear path to getting rid of expensive, unsecured debt. Many rewards and loyalty programmes announce new partners, benefits and point systems at the beginning of each year, so take time to understand how each programme works and how you can use them to your financial advantage.
Being the last month in the 2021/2022 tax year, now is the time to top up your retirement annuity to ensure that you maximise the tax-deductible contributions towards your investment. Remember, you are permitted to invest up to 27.5% of your taxable income per year towards your RA, subject to an annual maximum of R350 000, on a tax-deductible basis. If you’re unsure, ask your financial advisor or accountant to quantify 27.5% of your taxable income – bearing in mind that you may have multiple income streams that need to be taken into account. Your financial advisor should be able to calculate exactly how much you’ve invested into your RA since the beginning of the tax-year, together with the tax-deductible amount you still have available to invest. Remember, investment providers generally require a few days’ notice if you want to make ad hoc, lump sum payments into your RA, so get this process underway early on in February.
At the start of a new tax year, use the opportunity to scrutinise your various statements, including your pay slip, bank statements, home loan accounts, vehicle finance statements, credit card statements, and cell phone accounts. When it comes to your salary advice, check that your leave is correctly recorded and that UIF and other deductions are accurately being deducted. Check your bank accounts carefully for debit orders, subscriptions, and bank charges. Take time to understand how your bank charges work and, if necessary, do your research and investigate other bank account options that may be more suitable and cost-effective given your personal circumstances. Even if you don’t have any debt in place, check your credit score online to ensure that no fraudster or scammer has unwittingly used your ID number or personal information to ring up debt in your name.
Although tax filing season only opens in July, start now by requesting and collating the documentation and information required to complete file your tax returns. This includes obtaining an IRP5 or IT3(a) certificate from your employer, medical aid certificate, and retirement annuity certificates. Other documentation that you will require to complete your submission includes certificates received for local interest income, foreign interest income, and foreign dividend income. To claim for your medical aid tax credits, you will need proof of qualifying expenses from your medical scheme for the period 1 March 2021 to 28 February 2022. If you receive a travel allowance, you will need a logbook to claim for business travel deductions. Other documentation includes all information pertaining to both local and foreign capital gain transactions, documents and receipts for commission-related expenditure, all information relating to the letting of assets, and all information relating to income that must be declared or deductions that must be claimed.
Our personal and financial circumstances tend to change more frequently than we realise, so use this month to review your long-term insurance cover – not only for shortfalls, but also for excess insurance cover that you may no longer need. For instance, if your income has increased (or decreased) in the past year, check whether your nominated income on your income protection benefit is still appropriate for your circumstances. Similarly, if you’ve changed occupation, you need to ensure that your insurer has been advised of the change and whether any additional underwriting is required. Check the level of your bond cover against the amount still owing on your home loan because, if you’ve managed to pay off a substantial portion of your home loan, you may be in a position to trim back some cover. As you get older and your debt reduces, you may find yourself needing less life cover, so update your balance sheet and re-evaluate the life cover you have in place against your actual need. Most importantly, review the beneficiary nominations on your insurance policies to ensure that they reflect your goals.
Not having sufficient short-term insurance can set you back financially and, as laborious as it may be, take time to review your building cover and household contents insurance. In the process of acquiring material possessions and/or doing renovations to our homes, we tend to forget to adjust and update our short-term insurance. Request the latest policy schedule from your short-term insurer or broker and go through it carefully. Pay careful attention to excesses, exclusions, and cover limits, and ensure that you’re not paying premiums for items you no longer own. Check the value of your building, vehicles and other insured assets, and make sure these values are correctly reflected on your policy.
With July being National Savings Month, now is a good time to review your various savings accounts. If you’re contributing towards a tax-free savings account, check your contributions and make sure that they fall within the annual limit of R36 000 to avoid penalties for over-contribution. Review the level of your emergency fund to ensure that it remains appropriate to your personal circumstances and risk factors. If you feel you have excess cash in your emergency fund, consider transferring the surplus to a vehicle that can offer more favourable interest rates. Halfway through a benefit year, it is likely that your medical savings account is running low, so check the balance in your MSA so that you don’t end up with a nasty surprise should you face medical expenses in the second half of the year.
By now, you should have all the information and documentation you require in order to file your tax returns and, while the deadline for returns is generally sometime in November, it makes financial sense to submit your returns as soon as possible so that you can make use of any returns owing to you. While you’re doing your online filing, use this month to tighten up your online security when it comes to banking, investing, trading and online shopping. You can do this by updating your passwords, implementing a password management system, and adopting two-factor authentication systems. In doing so, consider drawing up what is referred to as a ‘digital will’ which is a document that sets out all your online accounts, login credentials, passwords and security details together with a ‘digital executor’ so that, in the event of your passing, you have a trusted friend or family member who can take control and ultimately close down your online affairs.
September is National Wills Week, so use the opportunity to locate and review your will to determine whether it remains in line with your wishes. Specifically, check that your heirs and beneficiaries are correctly nominated and identified in your will, keeping in mind that family relationships and dynamics have a tendency to change over time. Check that the guardian you’ve appointed for your minor children is still the person you would like to care for them if you are no longer around, and ensure that your nominated executor is still willing and available to perform the function in the event of your death. At the same time, go through your estate planning file to make sure that all requisite documentation such as ID documents, passports, birth and marriage certificates, trust deeds, title deeds, building plans, and so on, are in order.
If you’re invested for the long-term, it’s never a good idea to track your investment too regularly, particularly if you still have a way to go until retirement. Depending on your proximity to formal retirement, investment reviews can take place quarterly, bi-annually, or annually. That said, every investor should review their retirement goals and objectives on at least an annual basis, have a comprehensive analysis performed on their investments, potentially rebalance their investment portfolio, and make adjustments to their investment strategy where appropriate. Schedule time with your advisor to do a comprehensive review of your investments to make sure they remain fully aligned with your lifestyle goals and future plans.
Most medical aids announce their benefit changes and contribution increases around this time, so use the month of November to carefully consider your healthcare needs for 2023. Besides for affordability, you will need to take into account your health status and that of your loved ones, any changes to your health that occurred during the year, any new chronic conditions or ailments, and any procedures or operations that need to take place in the foreseeable future. Selecting the right plan option for your needs can mean sifting through endless amounts of information, so consider seeking the advice of an independent healthcare advisor who can narrow down the options for you and help you select a plan that meets your needs.
If you’re fortunate enough to have received a year-end bonus, give careful thought about how best employ this money. Give consideration to the level of debt you currently have, the financial commitments facing you in January, and how much you can still contribute towards your RA on a tax-deductible basis. While you may want to earmark some of your bonus for festive season spending, the best advice is to employ a strategy which creates a balance between creating a memorable festive season for you and your loved ones, while putting some away to strengthen your financial tomorrow.
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