The New Year is a great time to evaluate and set some resolutions or goals. Making financial goals isn’t the most exciting way to kick off 2020, but the future impact if followed through can be life changing.

It’s not common to wake up on January 1st and think I’m going to set my financial resolutions, we are most used to lifestyle and health resolutions like drink less, stop smoking, lose weight. Financial goals are difficult to envisage unless you link them to life goals, so try writing down what you’d like to achieve. Such as Ï want to be mortgage free by the time I’m 55″ and then turn that into your financial goal.

Like with all resolutions or goals it makes sense not to go crazy and make achieving them unrealistic. Be sure to set small realistic goals that will make it easier to achieve to reach larger goals.

You may want to start with large goals such as buying a property or taking early retirement, so find out what you actually need to get there. Do your homework or take advice form a specialist. Whatever your goal is it’s important to make sure you set up a system to measure it. You could even recruit someone to assist you and hold you to account.

Some financial goals below that could help you along the way:

BUDGET, BUDGET, BUDGET!

This may seem like a basic, but not everyone knows what their budget is. There are many people that earn a great income and yet each month struggle financially because they don’t budget.

Setting up a budget can be quite daunting if you have not done it before. There are lots of tools and resources now to assist. Most banks have budgeting information on their on your banking apps. ASIC have produced a really useful Budget Planner to help get you started. Make sure you categorise into segments and pay close attention to discretionary purchases, coffees, fast food, monthly subscriptions that you don’t use as these are areas that you can work on easily to reduce your spending.

Once you’ve set up your budget, stick to it and ensure that you put time aside each month to update it and track your progress.

SAVE UP AN EMERGENCY FUND

We never know what life will throw at you, but we should always try and be prepared for the unexpected. If you are in the fortunate position of not having debt then having savings set aside can cover you in the case of an emergency and can also assist you in reaching your bigger financial goals. Even with debt it makes sense to have a small emergency fund if needed. Ideally it’s advised to have enough savings to cover you for 3 months.

There are resources available to assist in savings goals, such as the ASIC Savings Goals Calculator

PAY DOWN DEBT

Getting rid of debt has a huge impact on all your financial goals, utilising money saved and cutting back on the non-essential items can release extra funds to assist in paying down debt quickly.

You can start small by making extra repayments on your smallest debt, once paid off move on to the next one, or pay down expensive debt first, such as credit cards and personal loans. 

You can also:

• Review existing loans, especially home loans to ensure that you are on a competitive rate. A small rate saving can have a huge impact on total interest paid or the term of your loan. You can see how a small extra payment can help pay down your loan quickly on our Extra Repayments Calculator
• Consolidate – Look at consolidating expensive loans into lower rate loans or into your mortgage. Ensure that a payment plan is put in place to be cost effective as it doesn’t make financial sense to consolidate a $10,000 credit card into a home loan and pay it down over 20 years!
• Don’t take on extra debt!

TAKE CONTROL OF YOUR SUPER

Get an understanding of your superannuation. It may seem like a long way off, but ensuring your superannuation is on the right track could have a huge impact on your retirement plans.

If you have multiple super funds, look at consolidating into one to save on paying additional fees. Before you do ensure that you have an understanding of closing down a fund with insurances in place.

If in doubt you can speak to your super fund or engage a financial planner.

If you’d like assistance feel free to contact us by calling 08 9304 9682 or email [email protected]