So it wasn’t that long ago that 2017 kicked in and you promised to get on top of your finances this year! How’s that going for you now that we’re around six weeks in to the new calendar year?
You know what they say about “the best laid plans of mice and men” right?
If you want to break it down into a really easy to follow guide, I’ve got five top tips for you to help get on top of things over the rest of the year…
1. Set goals
Take charge of your financials this year by working out your goals, objectives and priorities and put a plan in place to reach them. If you want to get rid of credit card debt, increase savings, pay off your mortgage more quickly or boost your superannuation savings, the MoneySmart site has tools to help you work out a plan. Alternately, hooking up with a financial planner can help you work with a professional money coach to assist you to make it happen, articulate what you’d like to achieve, and give you someone to be accountable to.
2. Map with a budget
As any successful journey begins with a reliable map or an up to date GPS, the path to wealth starts with going back to basics and having an accurate budget. The thought of doing a budget might make your eyes glaze over, but a budget helps you see where your money is being spent and where you can make changes that will help you build wealth. You can use MoneySmart’s simple money manager to create your budget. I often recommend clients use it for their budgeting needs. It’s online, simple to use and comes in a few different languages too.
3. Get a better deal
It’s good to regularly check and make sure you aren’t paying too much for your mortgage, investment or personal loans or insurance policies. Shopping around regularly for the best deals could save you thousands of dollars over the long term. Talk to your lender or mortgage broker about what they can offer. Different banks have different deals, so they’ll search around for a better deal if they want to keep you as a customer. If they won’t help, feel free to shop around yourself and switch to another option or lender.
Before automatically renewing insurances, check whether your current insurer is giving you the best value for money. You might be able to get a better policy for a lower price or with better conditions. Often it’s worth asking a broker or agent for help as they have access to different policies and can run comparisons for you based on what’s important to you.
4. Improve your knowledge
It’s long been acknowledged that “knowledge is power.” Before you commit to any investment opportunity, make sure you understand the features, costs – upfront and ongoing, benefits to you, and all possible risks. Does the investment fit in with your plan? Don’t invest in something you don’t understand, and “if it sounds too good to be true, it probably is.”
Forewarned if forearmed, so equip yourself with as much knowledge as possible. Subscribe to investment magazines, download popular books on the subject, follow experts on social media or if you still feel clueless, engage a financial adviser to assist.
5. Manage Risk
Investing wisely helps build your wealth for the future. You’ve probably heard of the benefits of compounding interest, so the longer time frame you have, the better off you should be. All investments involve an element of risk – and often, “higher the risk, the higher the potential return.” Before you invest any money, take the time to understand the risk versus return. You need to work out your own personal style of investing. Are you conservative? balanced? or an aggressive investor? Often, we’ll have a different profile for different types of investment. If you’re younger, you’re likely to have a much more aggressive approach with your superannuation than you would with funds being saved for a housing deposit.
You’ve probably heard “don’t put all your eggs in one basket.” This is what diversification is all about. By spreading money across different asset classes and industry sectors, you are less likely to be affected by a particular economic event, like a drop in real estate prices, a fall in the share market or in a particular industry or sector.
So work your way through these five tips. I’d love to hear how they’ve helped you get on top of your finances!!