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Do your Financial health audit with this checklist

It’s only the first few weeks of the New Year but for many, it feels like they never went on a break. We lead busy and stressful lives, but to stay on top of your finances this year, you have to do a financial audit at least once or twice a year. To keep track of your finances, here is a checklist to make sure you cover all your bases when it comes to your short-term goals and long-term goals.

Emergency fund

I cannot stress enough the importance of an emergency fund. An emergency fund can provide a financial lifeline when you need it the most. Having an emergency fund covers you in the event of an unexpected financial blow, and can help prevent you from going into debt. If you have one income, having an emergency fund gives you a buffer should you get retrenched. And on a positive side, having an emergency fund can help you take on opportunities that may require you to put some money forward.



Review your insurance – firstly, your personal insurance, do you have important cover like life cover, dread disease, income protection and capital disability? Are you sufficiently covered? If you have had any changes in your life like the birth of a new child for example, remember to add them as beneficiaries on your life cover.

Nominating your beneficiaries on a life cover is key because should you pass on and your estate is being wound-up; the money will not attract executor’s fees.

If you are an entrepreneur who has partners in the business, it is wise to take a look at buy-and-sell agreements for business continuity.


Secondly, you need to look at your car insurance and household contents insurance. This you can review every year – you can possibly save some money by looking for affordable insurance but make sure that it is as comprehensive as possible.


Debt management

 If you want to pay off debt this year, you will need a plan. Firstly, you need to know whom you owe, your total debt amount and the interest rate you are being charged.

From there commit to either paying off the debt with the highest interest rate first as this is the debt that costs you the most money.




  • Credit card R 15,000                        21%
  • Overdraft R 50,000                          18%
  • Clothing account R     9,000             16%


In the above example, the debt that costs you the most money is the credit card due to its high interest rate; that is the debt you will focus on paying off first, while you still pay the minimum amounts required on all the other debts. Once that is paid off, you move to the next debt, which is the overdraft, then the clothing account.

Or use the snowball method of paying off debt. With the snowball method, you pay off the smallest debt first (despite what the interest rate is), once that amount is squashed in full, you roll the money you were paying on that debt into the next smallest balance.





Step 1: List your debts from smallest to largest regardless of interest rate.

Step 2: Still make minimum payments on all your other debts except the smallest

Step 3: Pay as much as possible on your smallest debt.

Step 4: Repeat until each debt is paid in full.



 Review your pension, provident fund or retirement annuity statements. Calculate if you are sufficiently funding your retirement. You can simply contact either your HR or benefits manager to help you understand the ins and outs of your pension fund. And remember to nominate the right beneficiaries as well.



 A last Will is a document in which you express how you want your assets to be distributed when you pass on. It informs your family who will receive which assets from your estate. A will most importantly allows you to nominate a guardian for your minor children.

You can easily draw up a will with your bank, some financial advisers or with companies like Capital Legacy   (https://www.capitallegacy.co.za/your-will/ )


Net worth calculation 

Your net worth calculation is an easy to do calculation that lets you know your current financial status and also informs you if you are making progress towards your financial goals or not.

Your net worth is equal to your total assets less your total liabilities (debts).

That being said, remember to review your medical aid and gap cover but also take into consideration your investments: the cost of investing and asset allocation.

***This article first appeared in City Press


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