Personal Finance: Your practical 2021 financial year planner
While you may resolve in January to be better with your money and think that ‘this year will be different’, it’s all too easy to get stuck on the hamster wheel by not making significant changes. Use our financial year planner to tackle a different aspect of your finances each month, so that by December 2021, you will be in a stronger financial position.
January – Plan your budget
Contrary to popular opinion, a budget is not static but should constantly be reviewed. Consider changes in your income and expenses over the past year.
Go through your last three months’ bank statements with a fine-tooth comb to get a good grip on where you spend your money. Divide your costs into regular fixed expenses (such as debit orders), variable expenses (such as fuel) and once-off expenses (such as birthday gifts).
Get help: Access free financial budget tools on the following websites:
February – Tax time
February is a short month and ends on a Sunday this year, so think about getting your tax documents ready for Friday, 26 February. Remember to make a note of the closing mileage on your car on Sunday, 28 February, if you are going to claim a travel allowance. Get help:
- Find out all you need to know on the SARS website (www.sars.gov.za) or www. efiling.co.za
- If you are a freelancer, use the Sage online salary tax calculator to calculate your tax liability:
- Online companies such as TaxTim can help you fill in your return efficiently. You can access TaxTim free or at a discounted rate via partners such as Old Mutual Rewards, eBucks, Sanlam Reality and Momentum.
March – Short-term insurance
You should revisit your short-term insurance annually to check that you are getting the best bang for your buck. Remember to compare apples with apples.
- Compare insurance quotes from different insurers on www.hippo.co.za or www.get-insured.co.za or www.insurancehound.co.za
- Check that you are not overinsured or underinsured when it comes to your home contents
April – Long-term insurance
If you have not done so already, take time to audit your life assurance needs. This is likely to have changed in line with any major shifts such as having a child, getting married or divorced, or changing jobs.
- Life insurance is meant to help your dependants survive financially if you die or are unable to continue working. Calculate how much life cover you need here:
- Smoking affects your health and your life expectancy. For a reality check, you can calculate your life expectancy here
- Your general habits also inform your life expectancy ratios. From exercise to food intake, lifestyle habits and hereditary traits, this website takes it all into account when calculating your mortality risk
May – Electricity audit
Electricity costs are set to rise by as much as 15% from mid-2021, making this as good a time as any to review your family’s electricity consumption.
- Not sure where to start? Use this electricity cost calculator as a starting point: where you can calculate how much money you would save by changing to LED bulbs and you can change the units as you prefer (days to months and watts to kilowatts).
June – Medical costs
You’re halfway through the year. If you are on a medical scheme, evaluate what’s left in your medical savings account. This is a good time to schedule annual check-ups such as the optometrist, mammograms and pap smears. Then plan how you are going to manage your medical costs for the rest of the year based on your savings.
- Medicine prices are regulated in South Africa. Use this tool to check you are not being overcharged and find out which generic medicines you can use
July – Savings month
As you head into the second half of 2021, this is a good time to review your savings plans.
Are you saving enough, are you in the right products and are you on target to achieve your savings goals?
- This savings calculator can help you figure out how much you need to set aside monthly and how much interest you need to earn to achieve your goals
- Liberty’s investment calculator helps you work out the required investment amount; the rate of return on investment; the investment term; or the future value of an investment
August – Women’s Month
Although women generally live longer than men do, they earn less.
10X’s third annual Retirement Reality Report (RRR20) shows that the retirement savings gap between the genders has grown in the last year. According to Statistics South Africa, South African women earn about 30% less than their male counterparts and their retirement savings also take a hit when they go on unpaid maternity leave or take a break from their career to raise their children.
- Use a retirement savings calculator to check that you make up for any shortfall and that your retirement savings goals are on track:
- Stanlib’s income drawdown tool takes fees and taxes into account and gives you a projection of your expected cash flow in retirement, helping you to determine how much income you can draw down monthly when you are retired.
September – Time to give your home filing system a spring-clean
If you don’t already have a home filing system in place, or you have fallen behind, spring is a great time to reset.
Having your documents organised according to each month with separate folders for different expenses will help you keep track of your money and simplify filling in your tax return.
October – Time to review and update your will
National Wills Week usually falls in October and you can have your basic will drafted by a participating attorney free of charge during this period.
“A valid will allows you to state your last wishes and who should inherit your assets and property, as well as to appoint an executor of your choice for your estate and also a guardian for your minor children,” says Mvuzo Notyesi, president of the Law Society of South Africa.
- Here’s what you need to know about making a valid will:
- Check this page for updates on National Wills Week 2021:
November – Medical scheme review
Your medical scheme will be sending you documentation about your options next year. Review the changes in costs as well as changes to benefits.
- Compare different schemes here
- Use this calculator to work out your qualifying expenditure and your total taxable credit amount for medical expenses:
December – Holiday budget and bonus planning
The sooner you can plan your holiday budget, the better. If you can save a little bit towards December each year, you can build up a “holiday budget”, which means you can have your December fun as well as the benefit of your usual bonus.
If you are lucky enough to get a bonus, make sure you allocate it wisely.
- Use this Excel worksheet to plan your holiday budget:
- This calculator shows you the effect of paying your bonus into your home loan:
Tip: you don’t have to wait for each month to start. Read through the planner and get started as soon as possible. For example, don’t wait for December to start planning your holiday budget! DM/BM