4 smart ways to get your finances into tip-top shape

1. Set your budget and stick to it
   Keeping track of your budget with the help of a spreadsheet or mobile app helps you review essential expenses and spending habits, and to set financial goals. Before drawing up your budget, review your spending habits from the past months and ask yourself if you made any impulsive purchases. Can you spend less by cutting back on certain luxuries such as taking taxis to work? Plan your budget to include saving for treats such as your year-end vacation, so you don’t have to pay for them on credit and then adjust your budget to pay it off later. Saving for luxuries in advance is likely to motivate you to budget more efficiently and keep you from overspending.
2. Prioritise and settle any debts you may have
   Are high-interest loans such as credit card debts hindering your ability to save? Such expenses will impact your savings, so avoid them by paying these bills on time and in full whenever they are due. Have an overview of payments by making a list of all your debts, how much you owe, when they are due, and when to make the payment. Clearing off these high-interest debts will give your net worth a chance to grow.

Once you have done this, turn your attention to handling your “good” debt, which includes mortgages as well as furniture, car and student loans that typically charge low interest rates. While such loans are typically not very damaging to your finances, the sooner you settle these debts, the sooner you free up more money for investing in your future.

1. Save for emergencies
   Rather than turning to credit cards in times of financial need, have an emergency fund that comprises at least six months’ worth of expenses for you to tap into. It’s a good idea to have a separate account just for emergency funds so that you aren’t tempted to dip into your reserves.

2. Start saving for your retirement early
   Now that you are not tied down by high-interest debts and have a rainy-day fund in place, focus on channelling your savings into a retirement fund or investment account. The best time to start saving for your golden years is actually when you start your first job or when you are in your twenties. Compound returns allow you to grow your savings over a longer period of time.