Your end-of-year financial checklist
As the new year approaches, it’s a great time to re-evaluate your finances. Tick these to-dos off your list before 31 December and you’ll set yourself up for a financially healthy 2025.
Set financial goals
Forget that resolution to drink fewer lattes and focus on some good financial goals instead. What are your short- and long-term priorities? Saving for a family holiday? Catching up on retirement contributions you missed during the pandemic? Purchasing a new home? Starting a business?
Once you’ve identified your goals, break them into smaller, actionable steps. For example:
- If your goal is to take a family holiday next summer, start by setting a realistic savings target and automate a small amount to be transferred into a dedicated account each month. We have a wide range of savings solutions which vary depending on minimum deposit, investment term and withdrawal terms.
- If your goal is to ensure that your retirement fund is on track, review your current contributions and consult your financial planner to maximise tax benefits and returns.
Schedule these smaller steps into your calendar to ensure you complete them.
Not sure where to begin? Your Private Banker is here to help you plan and prioritise so you can ease into the festive season feeling confident and ready to take on 2025. Let’s make it your most financially fruitful year yet.
Examine (or start) your emergency fund
Did you know that, according to Standard Bank data, an estimated 29% of high-income South Africans don’t have emergency savings? However, having cash in the bank specifically earmarked to cover life’s curveballs is crucial, as it protects you from taking on expensive, short-term debt when unexpected costs arise. That way, you can stay on track with your other financial goals (like saving to front-load school fees or retire early).
You’ll often hear that you need three to six months’ expenses in your emergency savings account. Try not to be daunted by that figure if you’re starting from scratch. Look at your budget, figure out how much you can afford to save each month, then set up an automatic transfer to move that amount into a high-interest savings account each time you get paid in 2025. After that, sit back and enjoy the sense of security you feel as that safety net grows.
Max out your Tax-Free Savings Account contributions
You can contribute up to R36 000 annually (between March one year and February the following year) and up to R500 000 in your lifetime to a tax-free savings account (TFSA). This is an account in which you can save money without paying tax to SARS on the interest you earn. If you haven’t maxed out your annual R36 000 contribution yet and have funds available, then you might want to plan how you’re going to do so in January and February 2025.
Re-evaluate your medical aid and insurance
With consumers receiving the unpleasant news that the cost of medical aid is set to jump an average of 10.7% in 2025 (calculated across the country’s 12 biggest schemes), it’s a good time to scrutinise your coverage and ensure you need everything you’re paying for.
Ask yourself the following: is your medical aid meeting your family’s health needs? Are you perhaps paying for more coverage than you require? Have you welcomed a new family member? Do you actually take advantage of the extra loyalty programmes you pay for? (Be honest, is 2025 really going to be the year you use that gym membership?) These are questions you should ask yourself every December, before the annual price increase, and adjust your medical aid plan accordingly.
The same goes for your insurance. Does your policy still match your circumstances? Or have you upgraded your car, home or devices in the past year? Small updates to your policy can add up to extra cash in your pocket. For example, if you recently had a garage built onto your property, whereas previously you parked your vehicle on the street, let your insurer know. You could see significant savings on your car-insurance premium every month (those few metres and a gate make a big difference). Similarly, if you forget to add your latest phone upgrade to your policy and it goes walkabout, you’ll be thousands of rands out of pocket when purchasing a new one.
Don’t forget about other insurance products, such as life insurance and disability cover. Ensure everything aligns with your current circumstances, family structure and financial goals. Explore our various insurance products.
Review your debit orders
It’s easy for small, automated payments to accumulate into a significant drain on your finances. Review your debit orders at regular intervals, checking for any unused or unnecessary monthly payments or subscriptions, then cancel them. Confirm that all your active debit orders align with your budget and that the accurate amounts are reflected. Doing this at regular intervals helps to eliminate wasteful spending and frees up cash for your 2025 goals, such as saving, investing or tackling debt.
Get your paperwork in order
No one likes to think about the worst-case scenario, but the end of a year is a good time to review your Will. Have your wishes changed at all? Private clients have access to a free advisory service to have a simple or complex Will drafted, and for estate planning advice.
Plan ahead for school fees
School fees and all the attendant costs (uniforms, books, sports equipment, extramurals, boarding, and so on) are some of the biggest expenses a family will see in a year. In 2024, fees for the 40 most expensive private schools in the country increased at an average of 7.3%, and six private schools now charge more than R350 000 per year for boarding and tuition. The South African Reserve Bank suggests that parents should prepare themselves for an estimated 7.7% increase in fees in 2025. Therefore, to provide your kids with the best education South Africa can offer, it’s essential to plan ahead.
Consider a front-loading strategy if your budget allows for it. This means paying all, or a portion, of the year’s fees in advance, which could mean you benefit from early-payment discounts. Front-loading also reduces your financial burden later in the year when other, unforeseen expenses may crop up. If front-loading isn’t feasible, aim to break the fees into monthly instalments rather than paying per term, which should help you better manage your cash flow.