Your new year financial checklist is here!

Published on 17th December, 2019 at 10:40 am

Use this new year financial checklist to stretch your rands further and supercharge your wealth.

Financial checklist #1: Pay school fees upfront

If you set aside some of your bonus from December, now’s the time to reap the benefits! “Allocate the funds to your child’s school fees,” suggests Sechaba Bolofo, a Lineo BlueStar financial planner. “Most schools give you a discount if fees are paid before March,” he continues. This can leave more money for extramural activities your child would like to participate in, or new uniforms.

If there’s anything leftover, Danelle van Heerde, head of advice processes and tools, suggests saving it for long-term goals such as retirement or shorter-term goals like a deposit on a house or a dream holiday.

Financial checklist #2: Make your household goods safe as houses

You may have gained or lost household goods last year, and this will affect your cover going into the new year, which you should include in your financial checklist. Take stock of how these changes affect your home insurance.

“Some things may have sentimental value. Others might be essential to your business or savvy side hustle,” says Marius Neethling, personal line underwriting manager at Santam. “Consider whether you can afford to lose these assets, and that’ll help you determine whether it’s worth insuring them,” he continues.

If you can afford to replace these, also consider the effect this will have on your finances in the long and short term and factor this in to your financial checklist. “Review all your risk cover and consider leaving your movable goods at home where they remain insured as part of your home contents cover,” he suggests. Haven’t insured your home contents yet? Read this.

Financial checklist #3: Check whether you’re paying the best premiums

Even if there is no change to the household items covered by your policy, make sure you’re paying a reasonable premium for their value. “The insured amount of house contents should represent the new replacement value,” says Neethling. “If overly inflated, this can increase the premium charged for this cover.”

Use our free online home contents inventory calculator to determine the correct value of your home’s contents, and earn 1 000 tier points!

When it comes to cover in general, now is the time to renegotiate your premiums. Your policies are up for renewal, and you may be surprised by how many providers will lower your premiums, but only if you pick up the phone and have that conversation. For short-term insurance, Neethling suggests another way to lower your premiums: “Consider taking a higher excess to reduce your monthly premium, but still have cover if you really need it.”

Financial checklist #4: Be your most tax-efficient self

Have you been putting off saving on your tax? Change that this year, even if you start with something short-term like a money market account. Depending on the interest generated, you could fall under the tax threshold, says Marc Sevitz, director and CFO of TaxTim, an online tax tool freely available to Sanlam Reality members. SARS allows an annual interest exemption of up to R23 800 per annum for taxpayers (under age 65) and R34 500 (for over age 65).

Also look into a retirement annuity (RA) if you haven’t already – you will receive a tax deduction for the contributions you make towards it.

Financial checklist #5: Don’t over-insure…

The cover needs of a young professional can differ vastly to those of a young couple with kids or a retiree, so checking you’re covered accordingly belongs on your financial checklist. “If a young professional doesn’t have dependants, a mortgage or their own business, it generally wouldn’t make sense to have too much death cover,” says Karen Bongers, product development actuary at Sanlam Individual life. “You may only need a small amount, if any. For example, just a funeral benefit, if you don’t want your family to be burdened with the cost of a funeral if you were to die.”

You may also have a diminished need for death cover if you’re approaching retirement. “Consider reducing death cover if your children have left home and are financially independent, or if your mortgage is paid off,” says Bongers.

Check out these savvy ways to cut other expenses to save for retirement.

Financial checklist #6: … But don’t underinsure either

Are you starting your first job? Seriously consider protecting your income. Your ability to earn is the most valuable asset you have right now, says Bongers. “Disability cover is essential,” she continues. “This can be in the form of income protection cover or disability lump sum cover.”

Remember that the earlier you take out risk cover, the greater chance you have of being charged lower premiums, so this is worth including on your financial checklist.

Sanlam Reality members get up to 30% off their risk product premiums, including life cover.

If you’ve recently signed a mortgage on a property, look at getting disability or death cover to ensure the cost of your bond is paid off in the event of your disability or death. “This is one of the best ways to protect your financial well-being against the curveballs life all too commonly throws at us all,” says Neethling.

Have you started a family in the past year? Seriously consider cover to protect your loved ones should anything happen to you or your partner. “Assuming you’re already covered for disability, it will now make sense to also have death cover to provide for your dependants if you were to pass away,” says Bongers.

Van Heerde adds: “Your will must be up to date and indicate who will look after your kids should you pass away. It is safer to refer to all children, rather than list them in your will, to ensure your will remains relevant if you have more children.”

Review all your cover in light of what you will want to retain when you retire. “Ensure that, where relevant, the cover you have is for whole of life,” urges Bongers. Certain severe illness benefits, for example, end at the age of 65, leaving you without cover in retirement, where the risk of severe illness is even higher, she adds. Opting for whole of life cover while you are still young is more cost effective than changing from term to whole life cover at an older age, where doing so might no longer be possible or very costly.

Financial checklist #7: Plan your next holiday

You may have just come back from your December break, but don’t let that stop you from prioritising future holidays on your financial checklist, especially with the Easter weekend just around the corner in April (it’ll sneak up on you!).

“Make sure you have the funds allocated for this already so that you don’t fall off the wagon come Easter. You might like to take some time off to spend with family, which comes at a cost,” says Bolofo. Van Heerde agrees: “You can book early, start saving and make sure you are able to get leave. Studies have shown that looking forward to a holiday creates almost as much happiness as the holiday itself.”

Save big on your travels by making the most of your Sanlam Reality travel benefits, here.

Financial checklist #8: Make money out of your debt

Yes, really! But be responsible about it. As part of your financial checklist, narrow down the number of credit cards you have to reduce the amount of fees you pay, keeping in mind the ones that have rewards linked to them are the better ones to hang on to. Van Heerde suggests paying back outstanding balances as soon as possible to keep on top of any interest charges.

The Sanlam Money Saver credit card automatically offers rewards in a big way, giving you up to 5% of your total spend back in cash-back quarterly or annually. “Simply re-channelling what you would have spent on other debit and credit cards through the Sanlam Money Saver credit card on a daily basis can result in significant, real savings,” suggests Francois Uys, head of digital, marketing and communications at Sanlam Reality. “For example, R10 000 spent per month will give you an annual Cash-back Bonus of R6 000!”

Financial checklist #9: Form good habits

Bolofo suggests challenging yourself to form a saving habit now to reap the benefits at the end of the year. “Make this new year count in your favour: if you save only R20 a day, by the end of the year you will have R7 300,” he points out. “You can do this with your spouse by both saving R20 a day so that by the end of the year you will have R14 600. This can go towards this year’s festive season or next year’s school fees for your children.”

He also cautions against falling into the trap of temptation: “Make sure that you don’t spend from your savings for Valentine’s Day if you are a couple. You could also save R200 each on special days like your child’s birthday, your birthday or anniversary.”

Financial checklist #10: Pay bills to yourself

Change how you think about saving, and it’ll become less a nice-to-have, and more a priority. As part of your financial checklist, create a healthy financial habit you don’t even need to think about by setting up a savings debit order in January just as you would any other bill. That way, even if you forget to manually put away money, your savings debit order will go off with all your other bills, and you’ll be on track to big savings. Van Heerde cautions, though: “Make sure your payments increase so that your savings keep up with inflation.”

For other savings tricks financial planners swear by, read this.

Have you used our online savings tool? Calculate how much interest you’ll earn over a set period, or how much you need to set aside each month, plus you’ll earn 1 000 tier points.

Kick-start your finances to supercharge your wealth this year by meeting with a qualified financial planner, who will assess your needs and help you plan accordingly.