The new financial year is here and now is a great time to review, refine, plan and take some action to set yourself up financially.
To help kickstart your finances, try these simple steps.
Let’s be honest. What went right or wrong for you last year?
Identify if you saved money by comparing your savings account balance now to what it was a year ago.
Do the same with your mortgage to see how much it has decreased and look at your investments to see how much they increased.
If the figures are disappointing, there is something not quite working.
Determine whether you are lacking discipline in how your use your bank accounts or whether you need some help with how to best capture your savings.
A few simple changes with how you operate your bank accounts or structure your pay, can be a big boost to your wealth creation strategy
Goal setting is a powerful, proven way to move you from where you are now to where you want to be.
Taking the time to write down what you want to achieve financially will bring you closer to that goal.
The more specific the goal, the more likely you are to achieve it.
Know what you spend
Review your expenditure over the past year by adding up your credit card statements or expenses in your bank accounts.
Once you know what you have spent, you can think about whether you need to make changes or tighten your spending habits.
Having a budget should be the number one priority for anyone serious about reaching their financial goals.
While many might consider the thought of a budget too constricting, without knowing how much money you have, and where it is going, you have no way of knowing how it can grow.
Time to cut back?
If you have reviewed your expenses, then you might have had a few nasty shocks.
Little things like coffee or takeaway can add up without you realising it.
It does not mean you need to stop enjoying these treats, but rather make a conscious decision on how much you are willing spend on them.
Factor this into your budget and stick to it.
Boost your savings
Now is the time to put aside a little extra cash in savings.
With the fat trimmed from your budget you will now know how much you can save. This might be just $20 a fortnight but every little bit helps.
A fantastic way to force yourself to save is to create a savings account without direct cash access, such as a debit card.
If you can get your employer to transfer your chosen savings amount directly into that account, and can’t access it immediately for those impulse buys, then the balance will keep growing.
Increase your super
Superannuation is a great savings vehicle for retirement but you are limited by the amount of money you can put into it each year.
However, if you rely solely on contributions from your employer then you will likely have plenty of room left over.
From increasing your salary sacrifice contributions to doing after-tax top-ups, there are plenty of ways to put that surplus income to work for your retirement.
Pay down debts
If you are buying a home, then consider putting your surplus income into your mortgage.
Even the smallest amount can add up to significant gains over the life of a loan.
Putting just $50 a month extra into a $600,000 loan can save up to $40,000 in interest over the full term of the loan.
Plan for emergencies
It’s important to have a strategy for when things go wrong.
Loss of income due to unforeseen health concerns can be crippling for any family.
Insurance cover can help protect your strategy, making sure that those you love will have one less thing to worry about should something bad happen.
Source: The Sydney Morning Herald
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The information provided in this article does not constitute specific advice. For further information , you should contact your professional adviser.