The task of reviewing one’s personal finances can be a mammoth and cumbersome one, the result being that important financial decisions are often postponed and delayed at great risk. If the enormity of such a task is putting your personal finances in jeopardy, our advice is to review the various components of your portfolio over a 12-month period using these guidelines:
- January 2017: It is prudent to ensure that your 2017 household budget has been prepared and spread-sheeted. The end of January is a great time to capture your first month’s expenditure, bearing in mind that January normally involves once-off, non-standard budget items which might scew your expenditure somewhat. Avoid being alarmed by these expenses.
- February 2017: The 2016/2017 tax year ends on 28 February, and our advice is to aim at ensuring you take full advantage of the amount that you are permitted to invest towards your retirement funding. The maximum allowable amount equates to 27.5% of your taxable income, and this must be invested before the end of the tax-year. Liaise with your accountant and financial planner to ensure that you invest at the correct levels and in the most appropriate strategy.
- March 2017: March marks the start of the 2017/2018 tax-year and will be set in motion by the delivery of Minister Gordhan’s Budget Speech. Amongst other things, Minister Gordhan will announce changes to the personal tax rates and tables. At the same time, many employers implement salary increases with effect 1 March. As an employee, any change to your remuneration will necessitate a review of your income protection benefit to ensure that you are protected at the correct level. You will also want to adjust the level at which you are investing towards your retirement funding to ensure that you are investing tax-efficiently.
- April 2017: With the advent of a new fiscal year, April presents an excellent opportunity to review inconspicuous expenditure such as cell phone contracts, bank charges, retail accounts and any subscriptions (online or other) that you have in place.
- May/June 2017: These months mark the start of the cooler winter season, which is an opportune time to re-assess one’s emergency funding. Many families deplete their medical savings accounts by mid-year, and our advice is to ensure that you have adequate emergency funding in place to survive whatever ailments you may be faced with over the winter period.
- July/August 2017: July heralds the opening of the 2017/2018 tax season and tax-payers are strongly encouraged to begin the E-filing process as soon as possible. Begin by updating your E-filing profile, and requesting vital documents such as your IRP5/IT3(a) or (b) certificates, medical aid and RA certificates. Work towards submitting your returns well before the November deadline to ensure a timeous refund.
- September 2017: South African hosts two very important weeks during the month of September, namely Financial Planning Week and National Wills Week. In keeping with the themes of these two weeks, we recommend reviewing one’s savings and investments portfolios against the backdrop of your goals and objectives. In addition, request that your financial planner and/or legal advisor peruses your Will, Living Will and/or any Codicils to ensure these documents remain relevant to your wishes.
- October 2017: Although October is well-known as Breast Cancer Awareness month, it also includes awareness days for other illnesses such as diabetes, mental health illnesses, arthritis, osteoporosis and strokes, to name just a few. This is an excellent time to review your severe illness cover. Although there is no rule of thumb in terms of quantum, our advice is to implement a level of cover that equates to your annual income.
- November 2017: By November, most open medical schemes will have released their benefits and contributions for 2018. Take time to review your 2017 healthcare expenditure and any changes to you or your family’s health status, and then consult your healthcare advisor on how to select the most appropriate cover for the following year.
- December 2017: Before being caught up in the excitement of the festive season, give some thought as to how you should spend your annual bonus wisely. Avoid making impulse purchasing decisions by considering your financial commitments in the year ahead. Also give due consideration to your festive season budget, bearing in mind that your December salary, which is generally paid early, needs to last until the end of January.
We may not know what 2017 has in store for us personally or financially, but we can take prudent steps to plan effectively for that which we know lies ahead of us. Financial success doesn’t just happen. It is meticulously planned for.
Have a super week!