Start the year financially prepared: essential tips for financial wellbeing

A new year often brings a renewed sense of motivation. It is a time when people naturally pause, reflect, and consider what they want to do differently going forward. While resolutions tend to focus on health, career, or personal growth, financial well-being deserves equal attention. A few intentional steps taken early in the year can significantly reduce stress and set a more stable tone for the months and years ahead.

Start with your budget. Pull up your most recent bank statements or financial plan and ask some honest questions: Where did I overspend? Which habits helped me save, and which did not? Did I spend money on things I did not really need? This kind of reflection helps identify small leaks before your monthly budget is entirely drained.

Once you have assessed the period behind you, it is time to build a practical plan for the year ahead. Create a working budget that accounts for savings, fixed costs, essentials, and a buffer for unexpected expenses. Many households underestimate how quickly annual debit orders, back-to-school costs, and service increases add up, which is why planning for them upfront can prevent unnecessary strain later in the year.

Top up your savings

If you can make even a small extra monthly contribution to your emergency fund, prioritise it. Ideally, three to six months’ worth of after-tax income should be accessible for emergencies, but the most important step is to start where you can. Incremental progress builds resilience over time. If you have tax-free savings options available, ensure you are using them effectively within the annual limits.

This is also a good time to review your long-term savings, particularly your retirement contributions. Any increase can have a meaningful impact over the long term thanks to compounding interest, and consistency matters more than amount.

Take stock of your debt

Reviewing debt does not need to feel overwhelming. Begin by listing what you owe, the interest rate attached to each account, and how far you have progressed with repayments. From there, decide on a strategy. Some people focus on paying off high-interest debt first, while others prefer the ‘snowball method’, where smaller debts are cleared quickly to build momentum. If your debt feels unmanageable, consolidation may be an option, but only if it genuinely reduces costs and simplifies repayments.

Use bonuses or windfalls with intention

If you are fortunate enough to have received a year-end bonus or to earn additional income this year, think carefully about how they can support your longer-term goals. Paying down debt, topping up savings, pre-paying school fees, or investing in cost-saving home improvements can extend their value far beyond the moment they are received.

At the same time, financial discipline should still allow for balance. Setting aside a small portion for something meaningful or enjoyable can support emotional wellbeing and make responsible financial behaviour more sustainable.

Get your policies and cover in order

This is also an ideal time to review your financial protection. Life cover, critical illness cover, income protection, medical aid, and short-term insurance are not ‘set and forget’ decisions. Responsibilities change, incomes grow, and family structures evolve. Reviewing policy details, beneficiaries, and powers of attorney annually helps ensure that your cover remains aligned with your circumstances. This is also a good moment to update your will and organise important documents, so that they are accessible if needed.

Income protection, in particular, deserves close attention. Your ability to earn an income underpins every other financial goal. Temporary illness or disability is far more common than many people realise and, without income protection, even a short interruption can destabilise your household’s financial security.

Bidvest Life’s 2024 Claims Report highlights this reality clearly: policyholders were 15 times more likely to claim on income protection than on death benefits, and South Africans under the age of 40 accounted for 47% of income protection claims but only 4% of death claims. These figures reinforce the importance of protecting your income during your working years.

And finally… do not do it alone

Working with an independent, accredited financial adviser can help you stay organised and adaptable as your circumstances change. With a clear financial picture, realistic goals, and the right protection in place, you can support today’s needs and gain long-term security.

* Cloete is the FAIS representative and training specialist at Bidvest Life.

PERSONAL FINANCE