The 5 Step Financial Health Checklist

Sep 2, 2014 Blog  Personal Finance

It feels like this year has flown by. Tax season has come and gone, and now it’s the countdown to the end of the year and hopefully a festive holiday period. Around this time its always a good idea to give yourself a quick financial check-up, just to make sure we are on track to survive the rest of the year.

1. How Much is Too Much?

There are a few factors we need to take into consideration when we evaluate our financial status. The most overwhelming of those is debt.

As the year progresses, money goes in and out of our accounts. We try to keep track of it all; however sometimes those credit card swipes come thick and fast. Two flat tyres in a week, a burst geyser or just one too many purchases. Things have a way of snowballing.

First things first, we need to work out how much we owe and to whom. Sitting down with your accounts is tedious but could save you in the long run. By knowing who you owe money to and how much, you can effectively budget for the rest of the year.

2. Clear the Decks

Now that we know how much we owe, we can properly evaluate our situation. Often we have debt spread over two or three credit cards, making it even harder to keep track of how much interest we’re paying. The next step in this check-up is to eliminate some of that debt.

While having debt isn’t a bad thing, having too much at one time can be. We need to consider how much interest we are paying on the debt and whether or not it is draining our precious finances. If you have the funds, try to pay off a card or two. By getting rid of that added cost every month, you can start to hit your budget targets.

If you don’t have the funds on hand but want to consolidate your debt into one payment, there are services to do that. Debt consolidation can make your life simpler, taking all your debt and turning it into one payment. There are a few ways of doing this: either through a debt consolidation company, taking out a personal loan from your bank at a lower interest than your current debt or by floating your debt to prospective investors on a peer-to-peer website like

3. Man with a Plan

Now that we have an idea of our debt and have taken steps to reduce it, we can start to plan for the rest of the year. At the start of the year you probably had an rough idea of how things would go financially and you budgeted accordingly. Six months in you will have an even better idea of where you stand.

Budgeting is often thought of as a dirty word. It makes us think of limitations and often forces us to choose between doing the things we want and doing the things we have to. While budgeting can be tough, try to think of it as a goal rather than a target.

By giving yourself an incentive to work towards, you are more likely to stick to your budget. Maybe the goal is to be able to take a vacation at the end of the year or buy your wife a really nice piece of jewellery for Christmas. Whatever it is, give yourself something positive to work towards. Not only will it make the process of making the budget more enjoyable, but it will help you stick to it.

4. Invest for Success

Now that you have an idea of your finances, you can start looking at ways to increase them. Simply leaving your money in a savings account might sound like the safe option but it could actually be working against you.

Savings accounts not only give you one of the lowest interest rates on your money but when you add in the administration costs and operating fees that interest simply disappears. Effectively, you are earning nothing. This is where investing in things like unit trusts, money markets or even in people can make you more money. In financial terms its known as diversifying.

In the past you would call up a broker who would sell you on the idea of a certain stock or fund. Now days we have a lot more control over where we invest. One of the newest forms of investing, peer-to-peer investing or crowdfunding, is one of the unique ways you can diversify your investments.

Global sites such as Lending Club and Kickstarter have blazed a trail for newer companies such as RainFin to follow. RainFin offers the South African market the same service as their global counterparts but with the added protection of one of the most sophisticated vetting parameters around.

5. Think to the Future

The point of this check-up is to make sure you’re in sound financial health for the next little while. One way we can make that process easier in the future is by putting money aside as an emergency fund.

Now this might sound like the oldest trick in the book but it is one of the most effective. We never know what life will send our way so why not be prepared. By keeping some sort of a nest egg for that proverbial rainy day we can avoid putting ourselves into greater debt if an unexpected expense comes along.

Build it into your budget, make it part of your investment portfolio or simply dedicate a portion of your income to it each month – this little cushion could be the difference at the end of the year.

Related Articles

  • Blog Do You Know Where Your Money Goes?

    How To Save, Money, Personal Finance, Savings, Tips

    How to save money and keep track of your finances Money! We spend half of our lives trying to make it. But once you’ve got it, do you know how to hold on to it? Learning how to keep track of your pe...

    Read More
  • Blog Do You Know What Is On Your Credit Bureau Record?

    Personal Finance

    Millions of South African consumers are blissfully unaware of the content and status of their own credit bureau reports – and to be honest, many still do not even realise that they are listed at the...

    Read More
  • Blog Innovation of the Year: Online Marketplace Lending

    INVESTMENTS, Personal Finance

    In the American Bank Technology News, it is said that 2014 was a “Gold Rush” year for online marketplace lending. As a result of the industry’s rapid growth and evolution, American Banker (a dai...

    Read More