A blueprint for personal financial success: Mid-Term Budget Policy Statement

Sonja Steyn

As South Africa looks to the Mid-Term Budget Policy Statement (MTBPS) for macroeconomic guidance, many households begin to wonder what this event means for them.

In his address, Finance Minister Enoch Godongwana outlined the government’s strategy to unlock economic growth and stability over the next three years, stating ‘This policy statement analyses the trade-offs and choices that the nation is confronted with, charting the path toward growth, transformation and action.’

That’s all well and good for the nation, but what can households learn gleam from this?

Sonja Steyn, Strategic Head: Wealth Management, Financial Planning and Advice at Momentum Advice, believes this is also an opportune moment for South African households to reflect on their personal financial strategies.

“The MTBPS traditionally outlines key government policy goals, forecasts the macroeconomic trajectory, and projects the fiscal framework over the next few years,” says Steyn. “There are many lessons South Africans can draw from when crafting their own financial aspirations and goals.”

Steyn provides a few comparisons to help households manage their own personal economy:

Expenditure: Balancing needs and wants
When it comes to personal finance, expenditure refers to how you allocate your financial resources. Much like the government, individuals must balance their spending between essential needs and discretionary wants. With the MTBPS having highlighted the need for careful expenditure management, South Africans should take a cue and assess their own spending habits.

"Just as government prioritises spending in the name of sustainable growth, we should all evaluate our personal expenses to align with our long-term financial goals," advises Steyn. "Regularly reviewing your budget can help identify areas where you can cut back and redirect funds towards savings or investments."

Debt: A double-edged sword
South Africa’s anticipated reduction in government expenditure and lower interest payments on debt serve as a reminder of the importance of managing personal debt. Just as the national budget aims to reduce the deficit, Steyn advises households to minimise high-interest debt that could derail their financial progress.

"Too often we overlook the impact of debt on our personal financial health," Steyn notes. "By effectively managing and reducing debt, we can improve our financial standing and increase our capacity to invest in your future."

GDP: Growing personal wealth
Gross Domestic Product (GDP) measures the economic output of a country, but it can also be scaled down and seen as an analogy for your own personal wealth growth. Where government aims to boost GDP by fostering economic stability, Steyn believes individuals can enhance their personal financial 'GDP' through strategic planning and investment – and just like the Minister of Finance – that also requires the right advisers in your court.

"A financial adviser can help tailor an investment strategy that aims to grow your wealth over time, much like a government works to grow its economy," says Steyn. "By staying informed and adjusting your plan as needed, you can better navigate financial uncertainties and capitalise on opportunities."

The importance of regular check-ins
Tax policies and budget allocations can change, affecting both national and personal financial landscapes. Steyn says this highlights the importance of checking in with a financial adviser regularly.

“The MTBPS is a check-in for the country’s economic health, so your financial plan also needs regular reviews to ensure it remains aligned with your goals and the current economic climate," says Steyn.

As the country looked to an improved budget outlook at this year’s MTBPS, South African households should consider how macroeconomic factors influence their personal finances.

“By drawing parallels between national fiscal strategies and personal finance management, we can take proactive steps towards securing our financial futures. Let’s learn from government’s approach and let the MTBPS be a catalyst for financial reflection and action on our own journeys to success,” concludes Steyn.