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Ghana: Transform resolutions into actions for a prosperous New Year – Old Mutual

Tavona Biza, the Group Chief Executive Officer (GCEO) at Old Mutual Ghana, suggests that while crafting New Year’s resolutions is a common approach to improving the year ahead, it’s essential to keep financial resolutions simple and minimal. This approach increases the likelihood of success, as rigid rules often lead to brief adherence followed by a return to old habits.

Mr. Biza highlights five essential financial planning strategies/resolutions that can profoundly impact your life. Incorporating these principles into your resolutions can contribute to a smoother financial year in 2024.

The initial strategy involves reducing spending and increasing savings, with the implementation of a budget being crucial to achieving this goal. Adopting the 50:30:20 budgeting method can prove to be an effective approach.

This guideline allocates:

50% of your income to Needs: This portion covers essential and fixed expenses.

30% to Wants: This portion focuses on non-essential lifestyle spending.

20% to Savings: This portion helps build a financial cushion for the future and supports your financial goals.

Utilizing the 50:30:20 guideline as a framework and adjusting the ratios as necessary can assist in staying on track.

Reducing spending might initially seem challenging, but it can be achieved by identifying and eliminating small, everyday expenses that often go unnoticed. By closely monitoring your daily spending patterns, you may be surprised to discover that seemingly insignificant purchases accumulate to a substantial amount over time. For example, a daily expenditure of GH¢20 on small items translates to GH¢140 per week, GH¢600 per month, and a significant GH¢7,300 annually. Identifying and eliminating these unnecessary expenses can contribute to improving your financial well-being.

The second strategy is to spend less and reduce debt. Begin by comprehending your spending patterns and pinpointing areas where cutbacks are feasible.

Limit the amount of cash you keep, deactivate non-essential debit cards, refrain from unnecessary borrowing and deposits with no interest yields. These measures can help prevent impulsive spending and keep you aligned with your spending goals and any debt repayment plans. Avoid financing entertainment with credit.

The third resolution involves distinguishing between wants and needs. Acknowledge that what you desire may not always be essential.

“Purchasing luxury retail items through instalment plans can be a costly attempt, especially with interest rates hovering around 30 percent. Consider saving for desired items instead. Often, you may find that the desire for the item diminishes once you have the funds,” Mr. Biza added.

The fundamental principle of financial management is that if an offer appears too good to be true, it likely is.

“It’s unfortunate that people seeking financial success often fall prey to unrealistic promises that lead to disappointment. Steer clear of any investment scheme that offers abnormally high-interest rates or unrealistic returns on your money. Your fourth resolution should be to stick to reputable financial institutions for your investments,” he said.

Finally, there’s one resolution that could have a life-altering impact on you and your family, Tavona emphasizes.

“As we transition through life’s stages, from our first jobs to retirement, having a trusted financial adviser can be invaluable. Their expertise can guide you in structuring savings, investments, and long-term financial planning, ensuring you build a lasting legacy for your family.”

“As with all financial endeavours, swiftly translating your resolutions into action is the cornerstone of achieving prosperity,” he concludes.

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