3 January 2017
Seeing how things pan out is never a great approach to achieving your financial goals. Without a strategy in place, you’re not exactly giving yourself a fighting chance.
Why not take some time this new year to make some strategic nips and tucks to your financial situation.
Before leaping headlong into the new year, it’s worth taking five to review how you travelled last year. Did you begin by being disciplined, only to let things unravel? Was it a blur of bills? Were there unexpected curveballs that were hard to recover from? Try to remember your headspace at key moments to pre-empt how you’ll handle the same situations next time.
Forgetfulness is the enemy of goal keeping. According to the findings of a survey conducted by Australian comparison website, finder.com.au in December 2015, 14.77%1 of Australians who fail to keep their New Year’s resolutions say they simply forgot.
If your goal is to start an emergency fund, consider setting up an automatic deposit from your regular transaction account into a separate one. That way it doesn’t matter if you forget. You can do the same to make sure your bills are paid on time too.
The survey also found that one quarter (25.23%)1 of New Year’s resolutions are broken because of a failure to track progress. To manage your personal finances, you need to know where your money’s going. ASIC’s MoneySmart TrackMySpend and goal tracker apps are terrific, free tools that help you do just that.
It’s the keystone of a financial plan, but the challenge is starting. If past budgets have been annoying, and you’ve resorted to winging it, an interactive budget planner could bring it back on track.
Getting your debts under control, like the smouldering post-Christmas credit card, is a good place to start. Punching in numbers to a credit card calculator will help you see what a difference extra payments can make.
A few simple adjustments can make a big difference to the amount of money you’ll end up with in retirement. For example, consider combining multiple super accounts to save fees, review your investment options, start automatic salary sacrifice contributions or make extra contributions to boost your nest egg2.
2 There are limits on the amount of before and after tax contributions you can make each year which are called contributions caps. You should monitor any contributions made as there are taxation consequences for exceeding these caps. For more information see How super works and How super is taxed.
Making extra repayments can save thousands. For example, a couple with a $400,000 mortgage could save around $50,0003 and pay off their debt almost four years earlier by contributing $200 extra monthly. Use a mortgage calculator to work out how you could pay off your mortgage sooner.
3 Assuming a 5% interest rate over a 25 year term, $2,338 minimum monthly repayments, $0 annual fees.
Having the cover in place is a critical part of a financial plan, but it pays to shop around. Make a resolution to compare the policies offered by other insurers when your home or car insurance comes up for renewal in 2017.
Having too many resolutions is why 21.59%1 of Australians fail to keep them. So while it might feel productive to write a page full of goals, you might be more likely to succeed if you pick just a few.
Lastly, research1 shows those who keep their resolutions to themselves are more likely to fail (64%). So, share your goals with family and friends – on social media if that’s your style – and feel that accountability rush!
Happy goal kicking in 2017!
1 Survey conducted by www.finder.com.au, 29 December 2015, Sydney Australia, Be a geek and live in Tasmania: How to win at New Year’s resolutions.