What lights your fire financially? Everyone’s financial future looks different.
For some people, it might be as simple as being completely debt free. Others couldn’t live without an annual holiday. Many want the security of a small nest egg or emergency fund being available. Others would love an investment property. Whatever it means to you, a brighter financial future can start with a few small changes to how you currently deal with money. The key is usually to establish some good financial habits – no matter where you are right now.
What are some steps you can personally take towards a brighter financial future? Most often, it starts with living within your means, or spending less than you earn. I’ll outline a few options and suggest you try a couple to begin with and see what a difference it makes in your personal circumstances.
- Track your daily spending habits – get a receipt for everything you purchase and pop it on a spike or in a box for a month. See what’s really going on with your spending!
- Begin a budget. And before your eyes glaze over, there’s plenty of online calculators that can help you, so you don’t need to do it alone. Try the ASIC MoneySmart option to kick things off.
- Review your spending habits – Do you have the best phone plan? Are your insurances the best value for coverage and cost? Are your bank accounts and fees cost effective? Do you have a low cost loan and a good deal on your mortgage? Can you cancel some subscriptions you no longer need? There’s lots of comparison sites now available to help! Where can you cut back?
- Start clearing debt – work out what’s the highest interest rate across your various debts – quite often, it’s the credit card or personal loan. Especially if the debt if not tax-deductible, work out a plan to bring it down more quickly. Paying the minimum each month, you’ll never get rid of what you owe! As one clears, cancel or reduce the facility and then start directing those funds towards the next debt.
- Is it time to start investing? As your debt comes down and you no longer need to fund those large payments, can these be directed towards an investment portfolio? Find out if you’re ready to start investing here.
- Take care of your future! Have you given due care or attention to your retirement savings? It’s easy to put it on the back burner thinking it’s so far off, but it is your money and needs to be nurtured. Chances are, the Government’s pension plan will be less and less available over time, so taking care of number one should be higher on your list than it likely already is. And the longer you have to go, the better compounding interest will work in your favour.
Hopefully, these tips will help set you on the way to a brighter financial future. I’d love to know if you’ve tried one out and let me know how it’s worked for you!