Like us, you probably woke up on New Year’s Day with a financial hangover far worse than your post-party dry mouth and aching head. The cure: take two Disprin and read on...

What’s the easiest way to spend less?

Pay for everything you buy over a counter – from groceries to make-up – with cash. “When you pay with notes, you think twice about what you buy,” says Lois Frankel, author of Nice Girls Don’t Get Rich.

I have no idea where my pay-cheque goes. Is there a simple (and painless) way to create a budget?

Most people are unreasonably afraid of the B-word. According to Paul Slot, head of debt-counselling company Octogen, less than 10 percent of people know what they spend every month. But knowing where your money goes can show you where you have room to spend, as well as where you need to cut back.

According to Slot, the ideal budget should be broken down as follows:

- 35% for household expenses like groceries, utilities and entertainment.
- 35% is the maximum you should spend on debt repayments.
- 25% in financial services like your pension fund and risk cover.
- 5% goes to discretionary savings, like building an emergency fund and unit trusts for your child’s education.

And the hardest expense for South Africans to cut back on? Entertainment. Try replacing a girls’ night out with a wine-and-chocolate evening – everyone brings their own bottle.

Do I need a financial planner? And how do I find a trustworthy one?

Quiz time! Is your credit-card balance zero? Do you have financial goals beyond “investing” in designer clothes? Do you know what you normally spend your salary on? Do you make regular contributions to your retirement savings? Is the word “portfolio” part of your vernacular? If you answered “no” to three or more of these questions, you need a professional, especially in this cloudy economic climate.

A good financial planner will help identify changes you need to make to your spending, saving and investing habits to ensure you remain financially sound. The website www.fpi.co.za has a list of accredited financial advisors, but it’s also worth checking out www.sapoty.co.za. This lists the finalists in the Celestis Practice of the Year competition. These are financial services practices that have been recognised for their excellent service to clients.

Next step: ask around. If you have a friend who’s happy with her advisor, that’s a good reference.

In South Africa, most advisors work on a commission basis. In other words, they only make money if they sell you a product. So either find a fee-based practice that will charge you per hour, or ensure whatever the advisor is proposing in terms of investments or risk cover makes sense to you.

Alternatively, consider a life coach who also focuses on finance. They might not be licensed to provide investment advice, but they can help you set your financial goals and ensure you stick to them.

Are any debts worth incurring?

Yes, but unfortunately, credit card charges for Prada handbags and designer shoes don’t fall into that category. A “good debt” buys anything that maintains or increases its value over time, such as a home, an education, or a reasonably priced wedding photographer. Bad debt is incurred when you continue paying for something long after the benefit of the purchase is gone, such as R50 000 worth of orchids flown in from Ecuador for said wedding, a new car (you know it starts depreciating immediately, right?), or theatre tickets to Cats for you and your girlfriends. So unless the goods are going to keep giving back, it’s better to go without than spend money you don’t have.

Would I be crazy to buy a house right now?

With the weaker property market, prices have become more affordable and the banks are once again lending, so now may be the perfect time to buy. As long as you have a deposit of at least 10 percent of the value, and the monthly repayments are not more than 23 percent of your income, buying is a better long-term financial decision than renting. Just keep in mind that property values may not appreciate as quickly as they have in the past, so don’t buy unless you have a three- to five-year view on the property.

Why is my credit score important?

This number is like your Buddha belly: it goes up, it goes down, but it never goes away. Based on your past borrowing behaviour, your credit score clues lenders in to how likely you are to pay off debts in the future. The better your credit record, the better you are rated as a borrower and you’ll find your interest rates on everything from your credit card to your car and home loan will be lower. Some short-term insurance companies even offer lower premiums to people with good credit scores. By improving your score, you can save thousands of rands when you do take out major loans; in fact, it decides whether you qualify for a loan in the first place! Look at it this way: last year, 30 percent of applications for vehicle finance where turned down by Absa due to a poor credit record.

Improve your score by paying bills on time and settling your credit card debt at the end of every month. Even better, cut back on the amount of debt you have. You’re entitled to one free credit check per year. Check with both major bureaus as the information may differ. Try TransUnion: www.mytransunion.co.za (make sure you scroll down to find the free report) and Experian: www.creditexpert.co.za.

How long should I hold on to financial records?

The Receiver of Revenue no longer requires you to submit paper proof of your claims, but you need to keep them for five years. This means all your bank statements, salary slips, retirement annuity statements, medical scheme expenses you’ve claimed, travel log book and so on. However, you can shred your monthly or quarterly investment statements once you’ve received your annual statement.

Which financial software is worth buying?

Download Quicken Starter Edition 2009 or Microsoft Money. These easy-to-use programs can track your spending, consolidate online accounts and remind you to pay accounts. It’s like Mom, but with an off button.

Is it bad to get a new credit card just for free flights?

It depends on your level of self-discipline. Credit cards can be a very cost-effective way to transact, and if you gain some free air miles, well, that’s a bonus. It can also act as an emergency credit facility (we’re talking life and death here, not a fashion emergency). If you do want to use your card, set up a debit order to pay off the full balance each month so you don’t start a debt spiral. This will also improve your credit record. Otherwise, just lock it up in a safe for a rainy day.

A friend asked to borrow R1000. I can’t say no. What’s the best way to handle this?

Friends and money don’t mix. A recent survey showed that among those who reported lending money to a friend on nothing more than a handshake, only 27 percent were paid back in full, and that figure only rises to 38 for family members.

Remember: there may be a good reason she can’t get the loan from her bank. This loan could end the friendship, so deal with it as a business transaction.

Write out the terms of the loan and when it will be repaid. There needs to be some sort of consequence to not repaying (a pair, or two, of her designer shoes you’ve been eyeing out can be used as collateral). To avoid hurting your friend’s feelings when you give her the papers, say this: “I value our friendship and wouldn’t want money to damage it. This contract will make us both more comfortable.”

This Eskom price hike is really going to hit my pocket, but I still want to use my hairdryer. What should I do?

Put a timer on your geyser. This is a lot cheaper than going the solar route and can cut 30 percent off your electricity bill.

Make your geyser comfortable. Wrap it up in a geyser blanket to cut down on heat loss. But make sure you also wrap up about one metre of the piping.

Go for long-life bulbs. Replace incandescent light bulbs with long-life ones (compact fluorescents). They use five times less electricity and last 10 times longer.

Unplug power cords. The average woman has 20 electrical appliances on standby at all times. Even if switched off, they still draw power.

Nuke it. Microwaves use up significantly less power than an oven.
Opt for a laptop. They use less electricity than a desktop computer – also handy during an electricity outage.

Should I pay online, post cheques or let companies debit my account?

Throw away the cheque book. Cheques are expensive and can easily land up in the hands of fraudsters. The safest and most convenient option is to use your bank’s online bill-paying service. If you have a bundled fee option with your bank, your online payments are usually included. You can set future payments if the bill is the same amount each month; otherwise just sit down at the end of the month and pay all your bills at once. Debit orders can be convenient and ensure that your bills are paid on time, but only sign debit orders with well-known institutions. For the rest, rather control the payments yourself.