It’s a new year and that means a fresh start. While there is no time like the present to get your money in order and start working towards a financial goal, if you need to pick a time of the year to get started, the new year would be it. To you, this may be about putting in more effort to save, paying off debt, buying your first house or tidying up loose ends like wills, super and insurance. Whatever financial new year fitness you’re aiming for in 2017, here are our tips to set you up for success and help keep you on track.
Identify your goals
If you don’t know what you’re aiming for, how can you achieve it? Your first step in getting financially fit should be setting a goal. It could be saving for an overseas holiday, a car or a house, or it could be paying off debt. Whatever it is, make sure your goal is realistic. If you can’t realistically achieve your goal in 2017, break it down. The sooner you start, the easier it will be to achieve your end goal.
Understand your spending habits
Understanding your habits is key to changing them. Start evaluating how you spend your money so you can see where you’re overspending and identify areas where savings can be made. Once you establish how much you spend on basic expenses, it’s easier to see how much you can realistically save towards your financial goal.
Break it down
Saving $150,000 for a house deposit may feel overwhelming and as though you’ll never get there. But if you break this goal down into bite-sized pieces, e.g. 30 parcels of $5,000, it will feel much more achievable. You’re also more likely to get there faster as you’ll pay more attention to the smaller changes you could be making to reach it and you’ll be continually motivated as you achieve each milestone.
Think outside the box
As the saying goes, “If you always do what you’ve always done, you’ll always get what you’ve always got”. If you’ve struggled to get to where you want to be financially, it may be time to look at alternative ways to get there. Simply ‘trying harder’ is not going to bring you results. Instead, consider cutting expenses, such as giving up your morning coffee, bringing your lunch from home or swapping your car for a bike. You may want to consider boosting your income by putting your home on Airbnb, using your skills to pick up part-time consulting work or getting a higher paying job. Or perhaps reducing fees, subscriptions or speaking to a financial adviser about ways to reduce your taxes.
Leave room for pleasure
Just because you’ve set some solid financial targets doesn’t mean you should give up on life’s pleasures. Life is a journey and you’re more likely to give up on your goals if you don’t allow yourself to have fun along the way. It’s about balance and moderation. Spend less, earn more. Focus on value rather than absolutes. And reward yourself when you hit your milestones.
Ask for help
Many of us start the year with good intentions, but things often get in the way as the year progresses. Financial planners can help keep you on track to achieve your goals. Once your strategy is in place, they'll keep you accountable, ensure you hit your milestones and help you overcome any challenges along the way. Some of the areas you should consider focusing on in the new year include:
- Gaining direction and building a financial strategy;
- Saving to buy a property (home or investment);
- Creating and maintaining a budget;
- Paying off debt;
- Consolidating multiple super funds and getting better returns; and
- Putting a will or estate plan in place.
Brenton Tong, director, Financial Spectrum