7 steps to take control of your money in the new year

Budget, Investing, Super

The new year is an ideal time to create positive change in your life. For many, this includes getting on top of their money and improving their financial position. It’s a busy time for us at Financial Spectrum as we see a lot of people who feel that they can be “doing better” and want to have a fresh start. If you’re feeling the same way as we move into the new year, here are 7 steps to take control of your money and provide a solid base for achieving your future goals.

1. Set a target

Setting a target can be hugely motivational when it comes to saving. It gives you a definitive endpoint and enables you to celebrate the small contributions along the way. Decide on a goal and work out realistic steps to achieve it. For the goal to be realistic, it is essential that you honestly consider your current financial position.  This includes your income, debt, savings and expenses. Ensuring your goals are S.M.A.R.T. (specific, measurable, achievable, realistic and timely) will go a long way in helping you to realise them.

2. Create a budget

One of the keys to take control of your money and achieve your goals is to set a realistic budget.  This needs to start with the allocation of money towards essentials such as your rent or mortgage, food, utilities and transport.  After that, it is necessary to prioritise your debt. Followed by an allocation towards savings, keeping in mind your savings goals and the timeframe you have set yourself.  Financial Spectrum has just launched new budgeting tools to help you manage your money and reach your goals sooner.  You can check out our tools and calculators here.

3. Delete your debt

In order to regain control of your debt, it is necessary to face it head-on. Calculate clearly what you owe and break it down by prioritising what you can pay off first. Start with the smallest amount owing, and chip away at it consistently until it is paid off.  When that is dealt with, allocate that money towards the next smallest debt until you are able to face the big ones and win.  Alternatively, it can be helpful to pay off the highest interest debts first. If you feel completely overwhelmed by your debt, there are free and confidential financial counselling services that can offer advice.

4.  Automate your savings

Prioritising and being consistent with your savings will help you reach your goals faster.  Automating your savings and making use of accounts that make it difficult to withdraw from can make all the difference to your progress. Set up direct debits into high-interest accounts and watch your money grow.

5.  Take out insurance

Insurance is often something we would rather not think about.  But in order to fully take control of your money it’s essential you have adequate protection in place.  Shop around regularly for the best policies for your needs.  If you’re not sure about what policies you need, speaking with a financial adviser will help keep you protected if things go wrong.  Make sure you review your insurance requirements periodically to ensure that any new assets are included.

6. Sort your super

If you have never consolidated your superannuation, you’ll likely be paying several sets of fees which will be eating into your nest egg. It is well worth the time to roll all your super into one fund and grow your money faster.  To further increase this growth, consider contributing extra money into your super fund. It is also worthwhile taking the time to learn about your super. Understand your investment options and check they’re right for you.

7. Invest for the future

Once you have tamed your debt and built up some savings, the next step is investing your money.  Always make sure you understand what you are investing in and how your investment option works.  With many investments, you’ll want to be in it for the long run so consider this carefully when making decisions. Long term investments such as property can be volatile in the short term so if you need your returns quickly, it might be worth choosing something better suited to short-term returns.  You’ll also want to ensure you’re within your comfort zone when it comes to risk. If anxiety about your money is making you sick, it is not worth the risk!

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