“I will lose weight”, “I will get fit”, “I will sort out my finances” – these old chestnuts are usually at the top of our New Year’s resolution lists but are usually forgotten soon after the last of the left-over turkey has been gobbled down!
And to quote Professor Julius Sumner Miller (of Cadbury Dairy Milk fame), why is it so? One of the reasons (aside from an absence of real commitment) is a lack of actual planning to make it a reality.
If your finances are stuck in a rut, here are a few New Year’s resolutions to help you craft a fool-proof plan. (We can’t help with the weight and fitness though!)
The first step to saving money is knowing exactly how much you earn and where it is being spent. It might make you cringe, but a budget could be the solution – if you spend less you can save more. Write down all the expenses you spend weekly and review your purchases and contracts for services such as mobile phones, loans, financial products and investments to make sure you are getting the best deal. Also some swear by the principle of paying yourself first – that is, before paying other bills, move a set amount (set up an automatic transfer) into a high-interest emergency or ‘rainy day’ fund.
Mortgages, personal loans, credit cards – the only way to save on interest is to pay back the loans as fast as you can. Make sure you have the right loan products in the first place (seek advice if you need to), then make a real effort to pay them out quickly. One strategy is the ‘domino’ effect which means knocking over the debt with the highest interest rate (while meeting minimum repayments on all of your other commitments) then moving onto the loan with the next most expensive interest rate.
Inactive bank, super and brokerage accounts can all attract fees. Close them down and transfer any remaining funds into working accounts that suit your circumstances.
Whether retirement is months or decades away, it’s never too early or too late to make sure your money will keep working when you stop. Round up all your entire super into one or two low-cost funds (find lost super at www.superseeker.super.ato.gov.au) and review the fees you are paying and how your money is invested. Talk to a professional about the best ways to make the most of your assets and find out about co-contributions, salary-sacrificing, or even self-managed super funds.
You work hard to acquire the things you have so it makes sense to protect them and protect your ability to pay for them. Having the right insurance for your needs is not only the responsible thing to do, it’s imperative should the unexpected happen. Talk to your broker to make sure you are properly covered with the right products for your circumstances and the correct levels of cover.
The more you learn, the better decisions you will make. Take the time to learn something new – whether it’s taking a class about online investing or reading a book on finance – there are many ways to educate yourself.
Learning a new skill or updating your look can be a great investment in yourself – and one that usually pays good dividends.
Always seek out the right advice from trusted advisers and then put your plans into action. This time next year you may only need to concentrate on getting fit and losing weight!
If you would like to know more, give us a call to arrange an appointment. We can give you more detailed information on the best approach for your situation.
EBM Financial Planning Pty Ltd and its advisers are authorised representatives of Financial Wisdom Limited AFSL No 231138. This document contains general advice. It does not take account of your objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision.