What are your financial New Year resolutions?
With the new year, it’s an opportune time to think about setting some financial goals for the year.
Let’s look at some of the Top 10 Financial Resolutions:
1. Know your ‘now’ situation
Best way to start planning for your financial future is to know where you’re at, what you own, and what you owe.
Work out how strong or weak your financial position is using online calculators. If you understand your current financial position you can start making smarter financial decisions to improve your situation.
You need to start with a good base, and if you don’t know your own financial starting point, then it’ll end up being one of those resolutions that gets forgotten sooner than you set them!
MoneySmart has an online Net Worth Financial Position Calculator to get you started.
Get started, and don’t look back!
2. Become financially savvy & interested
Were you surprised with your net worth financial position? How surprised were you? Are you healthy or unhealthy? Do you own more than what you owe or is it the other way around? Whatever the case maybe, get interested in your financial affairs, and make changes that’ll empower you to work smarter not harder.
Learn more about financial planning for your future, and the benefits of seeking advice. Read and download information from the internet, and even better get yourself acquainted with a good financial adviser.
The way to a happier and healthier financial future is to lay down a strong foundation to build upon it progressively to suit changing personal and financial situations.
3. Know your money ins and money outs
It’s vital to know how much comes in and how much goes out to ascertain how much can be saved.
Get a budget in place. Understand where your money is going versus how much money is coming in. The difference will provide you with left-over money. It’s the left-over monies that can be planned for investing to build wealth or perhaps count towards a savings goal or an emergency fund.
Try out MoneySmart’s Budget Planner.
Remember, the more informed you are about your financial position the smarter decisions you can make to afford the lifestyle you want later on in life.
4. Set some goals!
Now that you’re informed about what you own (assets), what you owe (liabilities or debt), how much money comes in (income) and how much goes out (expenses), it’s time to set some financial goals to best utilise the left-over money (surplus income or savings).
No matter the level of surplus income you may have, it’s a great idea to set goals that you can work towards reaching.
Here are some goals you can consider:
a. Savings goal – maybe for a deposit for your first home, family holiday trip, an education fund or getting an investment portfolio set up…..it’s endless what you can save for!
b. Financial education goal – get to know more about your super. It’s money your employer puts away for you, and how you invest it now can make a huge difference to how much money you’ll end up for your retirement. Is it best to put more into super or invest outside of super or make extra repayments on your home loan? Get informed and interested in financial knowledge!
c. Life goals – are you planning on getting married, starting a family, moving overseas to live or are you ready for retirement? There are plenty of life events or milestones that require planning and good financial advice.
d. Family protection goals – looking after your family is pretty important and getting a safety net put into place is definitely a goal worth setting & implementing.
5. Make the most of your superannuation (super)
Super is money your employer puts away for you to use for your retirement. What you do with your super now can make a difference later on. There are so many things you can do with super to help you build up a nest egg to match your retirement lifestyle plans.
You can top up (contribute extra amounts) your super, salary sacrifice (contribute directly from your salary before tax is applied) or make payments for your spouse to help their super balance grow.
If you have several super funds scattered everywhere, it might be more effective to have them rolled into one fund (consolidate) which makes it easier to manage and cost-effective.
Best to speak with your financial adviser to receive advice that is appropriate to your individual situation.
6. Investment Goals
If you’ve worked out you have some surplus income or savings you can do something with instead of having it sitting in your bank account, then creating an investment portfolio could be ideal.
It’s a great time to learn all there is to know about investing such as:
- What is your investment risk profile?
- What is asset allocation?
- What can I invest in?
- How long do I need to invest for?
- What are the risks I need to know?
- Is my money safe or guaranteed?
- How much growth can I expect?
- How much income can I receive from my investments?
Starting an investment portfolio to suit your needs and financial goals is an important step towards attaining financial security to lead to lifestyle choices to do what you want and when you want. It requires smart financial decisions, and one you want to consult with a financial adviser.
7. Create a financial safety buffer
Sometimes unexpected things occur that can throw your life into chaos, financially and personally. Things where accidents or injuries occur and you’re unable to work for awhile but your ongoing living expenses like your mortgage repayments and household utility bills continue to roll in without fail.
When faced with such emotional, mental and health concerns, it can quickly escalate to not only unravel your financial plans but cause undue stress and personal turmoil.
There are many ways you can protect yourself and your family against unexpected life events with carefully planned protection measures like personal insurance which can cover for loss of income due to sickness, injury or disability, and covers for life insurance as well.
Best to speak to a financial adviser who can advise you on the different types of cover and the levels of cover to seek that’s appropriate and relevant for your situation.
Be in control of your life, and your family’s safety and financial wellbeing!
8. Get a personalised financial future plan
You’re now better informed and more aware of your financial situation than ever before. You know about your financial position, understand your net cash flow situation, you’re thinking about some goals to set and you’re learning more about investment options and how to maximise your super.
Now, it’s time to get them written down so it can become your financial future planning roadmap which will help you to keep on track and motivate you to pursue the lifestyle you seek and crave for you and your family.
This is another great reason to chat with your financial adviser to get a personalised financial plan into place. A financial plan (Statement of Advice) is all about you, your goals and desires, your now and where you want to be within a set timeframe, and the how to achieve your goals. It also outlines some of the risks you need to be aware of, your expected outcomes backed with financial projections on income and growth expectations.
It’s your personal financial roadmap to help you get to where you want to be!
9. Get obsessed about your financial future
Who doesn’t want to be financially independent to do the things you want to in life? Well, now that you have your own roadmap to get you there, don’t stop talking about it.
Continue to think about your future, imagine the possibilities, believe in yourself and become truly focused and determined to get there!
The more you think about it, it fuels the desire and the hunger to reach the financial sweet spot. Don’t keep your plan to yourself. Talk to your family and friends about it, and most importantly check-in with your adviser to ensure the validity and currency of your plan.
As you reach certain milestones and experience certain life events your plan may require some tweaking and adjusting to make sure the plan is still relevant and realistic.
10. Surround yourself with smart people
To get ahead in life, it’s often more effective and easier when you wrap yourself with people who are smarter and more successful than you. It’s the wisdom, the ideas, the know-how and the experience you want to get more of so you can apply them to your own situation.
It’s like getting yourself a mentor or someone you can bounce ideas off, and learn from. It’s also someone who can point you in the right direction, guide you financially and help steer you to reach your financial and lifestyle goals.
Surround yourself with trusted professionals like accountants and financial advisers, and strike up a close enriching relationship to collectively guide and help each other out.
So now you have some financial resolutions to think about, pick and choose your top 3, and start your New Year with clarity, purpose and make it meaningful.
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This web page may contain general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision.