The first month of the new year is now over, how are your New Year’s resolutions progressing, was it to get your finances in order this year?
Just in case it isn’t going so well here are some tips to get you back on track:
1. Review your finances
Wanting to take control of your money means that you must have a plan in place. You should work out your short, medium and long-term goals. Less than 50% of Australians have a plan for their short-term goals and this is even less for their long-term goals.
Maybe the first step is to do a budget. If you need somewhere to start you can simply google ‘free online budget’ or try ASIC’s Free MoneySmart Budget Planner.
2. Take control of debts
We all probably spent too much over the Christmas period on the credit cards. It is now time to take control of the debt. You would be surprised at the interest rates on your credit card. Imagine if you had to pay more than 20% on your mortgage, now that would be scary. But most people who incur interest charges on their credit card are paying this interest rate.
There are various strategies we can use to reduce your home loan sooner. One way could be a simple direct salary deposit into your home loan.
Debts usually make up a large part of our monthly budget. Having a plan on how to manage your debt and reduce it as soon as possible is necessary for anyone who wants to take control.
3. Create a savings buffer
We all need a little buffer for security, feeling good about our finances and to help cover for some emergencies that may arise when we least expect it.
A good tip to help create a savings buffer is by starting a “set and forget” strategy. Open an online high yielding bank account and set up a regular deposit on or after your pay-day. You will not notice this over time and be surprised at how much we can save.
4. Maximise your super
You need to get to know your super and take a keen interest in it. The earlier that you take control of your super the greater the long-term benefits. You may be eligible to receive a Government co-contribution by putting money into super, some people may be able to get a free 50% investment return. That sounds good to me!
It may be necessary to get advice in relation to super to make sure you are in a fund that is right for you, has the correct mixture of fees vs benefits, and importantly has the right amount of insurance cover if something happened to you such as an accident or even worse.
5. Insure your best asset
I bet you that you have car insurance and house insurance. Cars are expensive to replace or repair so too our homes if damaged or burgled.
So why is it that so many do not insure their most important asset? Ourselves and our income. We cannot afford the house, car, boat or lifestyle if we do not have an income it’s that simple.
Getting this established early is the best way. We can help to make sure that you have the right amount of cover, plus make sure the premium will not automatically increase every year because you are one year older.
6. Buying a car
If you are wanting to buy a new car this year, I would suggest using ASIC’s free MoneySmart Cars App. This will help you understand the real costs of buying and running a car and to avoid the traps such as being sold add-on extras you do not need or want.
The ASIC MoneySmart Cars App is available on the Apple App Store and Google Play.
If you have decided to take control this year, you now have less than 11 months. If you continue to struggle don’t be afraid to ask and seek help from an experienced and qualified financial adviser so that you can achieve your goals now and into the future.