Kick off 2024 with financial stability

FRANCHISE principal and financial adviser at Consult by Momentum, Corne Welman, said most consumers feel depressed after the festive season break.

“When the new year starts, we typically head to the malls to do the back-to-school shopping, using the limited funds available in our already overdrawn accounts,” said Welman.

“But, as all retailers know, the average consumer is not immune to the temptations lining their shelves and the minute we see a potential pick-me-up for the post-holiday blues, all good intentions are out of the window, and we often find ourselves in a worse financial situation than before,” she explained.

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Instead of telling consumers what to do with their money, Welman shared a few tips that they should avoid.

Don’t withdraw money from your investments to pay off a holiday indulgence
Welman said many people feel a sense of guilt or despair about their festive splurges, especially when it comes to the new year.
During this time, they are suddenly faced with school fees, work-related expenses and in some instances overdrawn accounts.
Welman said that cashing in savings or investments to pay off the debt could lead to consumers incurring more risk with this disinvestment.
“Factors such as market timing, currency and systematic risk may end up eroding all of your hard-saved money and set you back more than a few months of saving,” she advised.
“Instead, rather speak to your financial adviser and work out a plan to address your debt in a way that doesn’t affect your savings or jeopardise your retirement plans.”

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Do not ignore the power of your retirement savings to reduce tax
Welman advised community members not to fall into the trap of skipping one or more of their retirement annuity premiums.
“You may end up negating your retirement tax-savings benefits, which offer an easy way of bolstering your disposable income for the year ahead. Rather, invest this money wisely and where it belongs towards your retirement.
“Take advantage of the tax breaks offered to incentivise these savings,” she added.

Do not put off reviewing your risk portfolio
The last three years have taught us that the future can be unpredictable.
Welman said risk products like life insurance, income protection and disability cover may feel like grudge purchases, but are critical to safeguarding the financial well-being of ourselves and our families.
“At the start of the year, we may have all the best intentions of reviewing our portfolio with our financial adviser. If we don’t prioritise this, we may blink to find that half a year has passed and we have left this important task too late.”
She said risk profiles change constantly with our lifestyle and circumstances.
“It is vital that we review these changes and how they impact our cover timeously, to ensure that we retain an adequate level of protection,” she said.
She warned against reducing your risk cover without professional advice. “There are often better ways of freeing up funds.”

Do not tap into your rainy-day fund to pay for fair-weather luxuries
Welman said that after the pandemic, many found themselves with a distinct urge to book a fancy holiday or make a lavish purchase to compensate for the hardship of the last few years.
She suggests that instead, we should rather look to what the pandemic has taught us.“We’ve seen how fast things can change and have realised that the future is unpredictable. Therefore, we should build an emergency fund as we never know what may be around the corner. Let’s learn from the past and not repeat our mistakes,” she said.

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