WEALTH

PLAN TO WIN

How to hit the ground running

THENDO MULAUDZI

The biggest challenge many people have when it comes to the New Year is planning. People will set all these new year’s resolutions and not plan accordingly. Many people, like myself, suffer from FOMO (fear of missing out) and on several occasions I have suffered from the JAN-U-WORRY effect due to failure to plan my finances for the new year. You simply cannot hit the ground running if you’ve not planned for it. It’s like running a comrades marathon, you’re not simply going to wake up and run the next day, you need to plan for it. Similarly, if you want to hit the ground running in New Year you need to plan for it well in advance. Many South Africans get paid on the 25th of the month, however in December they get paid 10 days earlier. This effectively means that a paycheque that normally lasts 30 days, now needs to last 40 days and all through a very busy festive season (cue #kedizemba and SBWL). In order to have a good start to the new year the planning needs to already happen with your November paycheque to ensure that you don’t over spend in November. You need to ensure that November paycheque, earnings or revenue lasts you until the 25h of December even though you get paid early. Often the easiest thing to do is when you get paid on the 15th of December is to move your salary to a savings account for 10 days and “pay yourself back” on the 25th of December. Same with your business finances, budget ahead for the office

party/staff treats (even if you’re a one woman or dual partner operation), salaries, supplier orders that close earlier and payments that must be made in the start of the year before revenue starts rolling in – especially if you run a seasonal business. The best way to hit the ground running in the new year is to have a budget. You need to be able to see all your expenses and ensure that your expenses do not exceed your income. Download this budget tool to help you budget for 12 months, you can always make amendments to the fields and amounts as your income and your expense increase. It’s important to start off with savings that are at least 10% of your salary (always pay yourself first) or that can cover your overheads for the first month. As your income grows and you get increases and promotions or your business revenue grows with increased sales or clients, try and put more money towards your savings you can use to pay for a deposit for a car/house, have emergency operating cash or invest back in your business. Your monthly savings contributions will reduce as you buy a house, a car, new investments in your business or adjust to suit your growth needs. In the current global pandemic and economic environment, make sure to pay off your debt, starting with the highest interest rate bearing obligations first (i.e. credit card, clothing account, loans, etc.). Car loans and bonds/mortgages usually have a lower interest rate as they are more medium or long-term. Always try and delay the instant gratification and save as much as you can, especially when you’re younger and have no obligations. The habits you start in your early years will continue as you grow older. People always expect that big paycheque to pay their debt however it never comes. Consumers should also start watching how much they borrow and if you are already at your maximum borrowing it will get worse as interest rates will increase and your monthly repayments will increase as rates go up. Always make sure you never take the maximum borrowing amount, rather leave a buffer for monthly repayments for when interest rates do go up. Another great way to plan for December and the year ahead is building a side savings account that you can tap into for December for all those late lunches and Christmas gifts. It’s really simple, you start by saving R10 a week and you increase that by about R10 on a weekly basis. Big goals are easier to achieve when broken down. For example; in week 1 save R10 for the week, increase that to R20 in week 2, R30 in week 3 and increase it incrementally according to the corresponding week of the year. So come week 52 you’ll be saving R 520 that week, this will make sure you will have saved R 14,000 at the end of the year to spend in December – without having to dip into your budget for the next year. If you feel R10 is too little you can start with R20 in week 1; R40 - week 2; R60 week 3 and R 1 040 in week 52 or higher if it suits your budget. Point is to keep it simple so it’s easier to commit, for your personal and start-up savings.

It’s within your power and control to hit the ground running, make a difference in your finances, and make your mark as you create wealth over time. Remember, in order to hit the ground running you in the new year you need to plan now.