Despite the challenging start to 2021 amid the second wave of the COVID-19 pandemic, 2021 still offers us the opportunity to reflect on the past year and renew our commitment to our big picture goals.

This is according to Elize Botha, MD of Old Mutual Unit Trusts, who believes that the new year is an opportunity to wipe the slate clean and continue improving our financial fitness. "The optimism of the new year gives us the chance to start again and build habits that will help us achieve our dreams and measure our success," she says.

To do this, Botha believes we need to think of our money wellness like physical wellbeing. "As the road to physical fitness starts with a single step, so too does financial fitness. It's like deciding to lose weight or to run a marathon, our journey to financial fitness requires taking small steps towards a clear and defined goal."

Botha understands that getting our money affairs back on track can feel like a tall order, especially after a monstrous 2020. "We tend to be scared of finances. We often don't believe we can change our lives as we don’t always realise every incremental step matters, says Botha.

"Earning a healthy income  doesn’t automatically mean that you are financially fit, nor that you're on track to reach your financial goals. Some people earn massive salaries, but as a result of lifestyle creep, for example, literally start living one paycheque to the next," she says.

Botha explains that lifestyle creep occurs when an individual's living standard improves as their income rises and former luxuries become everyday necessities. "While we all can't be rich, all of us can be financially fit by living within our means and investing towards our goals," says Botha.

She offers her four tips for setting and achieving financial fitness in 2021.

Find out what you value

In Botha's view, the first step for achieving financial fitness is understanding what you value. "While others will tell you to start by setting clear goals, in my view, if your goal does not align with your values, you're unlikely to achieve it," she says.

Botha suggests writing down what's important and what you value. "If there's more than one of you in your household, include your family in this process and bring everyone along for the journey," she says.

Set realistic goals

Once you understand your values, says Botha, it's possible to set goals. "Create a vision board to display your goals. Visit your vision board as often as possible and allow yourself to get excited about what you're working towards achieving," says Botha.

Bucket your goals

"Your financial aspirations must reflect every aspect of your life; they need to be realistic, after all. Most importantly, one goal shouldn't come at the expense of the other," says Botha.

Generally, she says that goals fit into one of four buckets, or categories. Still, she warns not to have more than five financial goals overall. "The first bucket should focus on creating security with an emergency fund," says Botha.

"You cannot predict crises as we saw in 2020, other than to accept that the wheel of life means there will be good times, and there will be challenging times, and we need to be financially prepared."

The second bucket speaks to education and ambition. "To increase our earning potential, we need to sometimes make an investment in our own expertise and skillsets," says Botha.

The third bucket relates to long-term goals. "These are the big ones that will have a major bearing on your life. They include things such as investing for retirement, investing to achieve financial freedom, or investing in educating your children," she explains.

The fourth is for your joy goals which are centered on freedom and adventure. "Here you set goals such as going on a beautiful holiday; things that you aspire towards or things that are really just a treat," says Botha.

Put a plan in place

Now that you have your goals in place, it's time to work on your plan to achieve them. "There are multiple free resources available to develop a plan, or you can get in touch with a financial advisor to help you plot your course."

Once you have a plan in place, focus on ignoring the noise. Don't allow passing events to cause you to chop and change your plan.

Also, don't be pressured into spending money on things you don't need. This way, you put yourself in a better position to stay on track with those important money goals you have set for yourself and your loved ones.

"Despite what many may think, becoming financially fit is possible", says Botha. "It has nothing to do with how rich you are or how much you earn. Rather it requires discipline, commitment and resilience to paint a brighter financial future," she concludes.