Do you love or hate new year’s resolutions? A new year brings about the perfect opportunity to set yourself some positive intentions for the year ahead.
What I don’t like about new year’s resolutions is the sense of failure if they are not achieved, which is why I prefer to think of them as goals or intentions to work towards as the year progresses.
Financial goals are always high on the list, but instead of thinking about how much money you want to save or when you’ll finally pay off that loan, make smaller incremental goals that work towards your end game.
Take charge of your future by making some small changes, starting here…
Create a budget
A classic and absolute necessity if you want to take control of your finances.
To get started on your budget, knowing how much you spend is key.
ASIC has a handy app called ‘TrackMySPEND’, which can be a helpful tool to record your expenditure. I suggest recording your expenditure for a two to four-week period.
Doing this will give you an accurate picture of what you are spending week-to-week and the key areas where you are overspending. From here you can start formulating your budget.
To create your budget, start by mapping out the essentials like mortgage/rent, bills and any debts. Then you can allocate fund limits for things like food, going out, clothing, renovations etc.
Create an estimate for the smallest amount of money you can live off and work from there. Then any leftovers can go towards savings.
Of course, make sure your goals are always SMART – specific, measurable, achievable (this one is key!), realistic and timely.
And remember that your budget isn’t set in stone. It is a flexible, ‘living’ plan. If you overspend in one area occasionally, you can always compensate by cutting back in another.
Decrease your debts
Instead of setting a deadline for when you want that debt paid off, start by paying more than the minimum repayment.
It doesn’t need to be a huge amount, just a little more than the minimum will go a long way to reducing the time it takes to pay that debt back.
Create a list of your debts and look at where you can allocate a little more of your funds towards paying the repayments, and factor this into your budget.
Don’t forget about your super
If you haven’t already done so, now is the time to look at your superannuation balance and consider investments and fees.
Ask your accountant about contributions you can make to your Super Fund.
If you have an SMSF, now’s the time to review the compliance and performance of your Fund.
Although the above goals seem simple, sticking to them will quickly work towards achieving your long-term intentions.
The start of the new year really is the perfect time to get back on track with your goals and add a few wins to your resolutions list.
If you have any questions, please contact your MWM accountant on 5596 9070 or firstname.lastname@example.org.