It has been another tough year for South African consumers. Fortunately, with 2017 just weeks away, there is an opportunity to plan for a better year ahead with inspiring New Year’s resolutions. 

“While New Year’s resolutions tend to revolve around losing weight and quitting bad habits, South Africans are well-advised to include financial resolutions for 2017,” says Floris Slabbert, Country Manager of Ecsponent Financial Services. “Unfortunately, with inflation rising, interest rate hikes on the cards and more market volatility expected, 2017 is unlikely to bring financial relief to cash-strapped consumers. It is, however, possible to reduce financial strain by implementing a few simple but effective resolutions for greater financial success in 2017.”   Slabbert adds that better management of your financial situation is a two-step process. “Firstly, you need a short-term financial plan - a monthly budget to manage your money. Secondly, you need a long-term strategy to meet your financial goals for the future. Implementing the five financial New Year’s resolutions below will give you both: a short-term plan for a financially stronger 2017 and a longer-term plan for a financially secure future.” Draw up a budget Draw up a monthly budget for 2017. Make provision for rising costs due to inflation, factor in expected interest rate hikes of about 0.5% and provide for the annual increases in expenses, such as medical aid contribution increases in September can be as high as another 15%.  Prioritise your expenses around the necessities, such as bond repayments, vehicle finance instalments, medical and other insurance, and debt repayments. Ruthlessly cull unnecessary expenses. Be disciplined and stay within your budget. A big key to up keeping of a budget is in the attention to detail and DIY. By preparing and prepacking lunch for the family on a daily basis will be much more cost effective.  Save, save, save Set aside an amount to save every month, even if it is only R200 at first, building up a reserve fund for unexpected emergencies, whether a medical emergency, or a vehicle or major appliance breakdown. Reserve/emergency funds work 80% better if the liquidity is linked to a notice period even if it is a 24-hour notice.  Also, save up for special occasions during the year, such as birthdays and holidays. If you are planning a holiday, save up each month to ensure it does not derail your budget or increase your debt.  Below is an example of a 52-week savings plan to start in January 2017: Free yourself from debt Avoid acquiring new debt at all costs. Instead, make it a priority to pay off your debt as fast as possible. Paying even R100 a month extra on a credit account will ensure you pay it off much faster. For credit agreements older than 24 months, check your interest rate in light of the new limits introduced by the National Credit Act (NCA). Once you have paid off a credit facility, cut your credit limit. Or even close the facility to prevent yourself from making the same mistake. Use extra money intelligently If you have extra money – a bonus, a salary increase or extra cash in your budget following an interest rate decrease, use it intelligently. For example, you could pay off debt, make an additional contribution to your retirement fund to make most of your annual 27.5% tax benefit or pay an additional amount into your home loan access bond. A professional financial advisor will be able to assist you to make an intelligent decision. Plan your financial future With your short-term financial situation under tight control, plan your financial future. Perhaps you want to save for university fees for your children, start your own business or retire financially independent at age 65.   Given the current realities of rising inflation, higher interest rates, volatile markets and low investment returns, the right advice and assistance from a reputable, registered financial advisor is crucial. An advisor can provide sound advice and suitable options to manage your risks, select investments with reasonable fees that outperform inflation and maximise your tax benefits. Just one example of a tax efficient option is preferential shares, which pay a dividend and is therefore taxed at a lower rate than the personal income tax rate.