How South Africans can make smart purchases in 2017

The end of the year is fast approaching. Everyday, you’ve had to make some financial transaction and you might be wondering just how wise each one was. They can’t all be winners and not all of us are rich. But you need to use 2017 as a way to rethink your purchasing decisions, especially as the market becomes more turbulent. With the radical changes that have occurred this year, such as Brexit and the nomination of Donald Trump, people are holding on to their wallets and bank accounts. Cyberhacks have targeted major corporations and single tweets have resulted in dramatic stock drops. How then should the average person think about their finances in the new year?

Start budgeting

The most important step in any decision involving finances starts with a budget. As My Money Coach notes: “Budgeting is simply balancing your expenses with your income. If they don’t balance and you spend more than you make, you will have a problem. Many people don’t realize that they spend more than they earn and slowly sink deeper into debt every year.”

Budgeting lets you see where your money is coming from and where it has to go. This allows you to know how much you can spend without sinking more into negative figures, avoiding debts and defaulting. In their summary of why budgeting is important, The Balance points out that you can save money in the long run, make the best financial decisions in terms of where your money is going and reduces anxiety – by having a firm handle on your money, you don’t have to worry about suddenly being without cash. You’ll know, for example, how much you can spend each day. This lets you save for more important items you might need, without wasting it on unnecessary daily luxury items.

As The Balance points out: “budgeting can actually save you money, and allow you to have more to spend by helping you to make the most of your money. Your budgeting style can determine how successful you are at budgeting.”

Focus on saving

Once you have a budget, you know precisely where and how you can save. Saving money means you can put it into a savings account. Considering how volatile the market is, a savings account is one of the most secure places your money can go. Putting money into a savings accounts allows compound interest to work on it – all you have to do is not touch it for an extended period of time. This can net you wealth by virtue of compound interest’s “magic”.

This is where you earn interest on your initial amount, then, in the next financial turnover, you obtain interest on that interest. This keeps increasing how much you have in the savings account. Unlike investments, you are not taking a chance on sudden shifts and changes to particular stocks.

Smart purchases

While obviously everyone needs to make purchases throughout the year, that doesn’t mean you need to make bad decisions. For example, if you’re looking for houses in Cape Town, you don’t need to look at the most expensive, high tech properties. Similarly, if you’re looking for cars in Jo’burg, don’t look at brand new vehicles – rather look for used cars in Gauteng. Used cars are cheaper, come with the same features as most newer cars and are often looked after by their owners.

Similarly, rather wait for sales and discounts if you have to make purchases of expensive items. Inevitably, everything from televisions to smartphones manage to drop in price.

You should also consider purchasing stocks, if you’ve not already done so. As US News points out: “Going into 2017, technology is seeping into almost every aspect of everyday life. From retail to travel and transportation, hardly anything is purely analog nowadays. From an investor’s perspective, that’s quite an opportunity. As you enter a new year and perhaps look to rebalance your portfolio, the technology sector still boast plenty of opportunity.”

While stocks are of course less secure than savings, you should still consider using this, as this is perhaps the best way to create wealth. 2017 can be a fresh start and a way to begin being better with your finances than ever before.