The dawn of a new year sees many people setting new year’s resolutions such as losing some weight or giving up smoking.
Similarly, the beginning of a new year is the ideal time for setting financial goals, and here are four practical ways you can kick your year off to a great start.
Decide what you want to achieve
January is perfect for taking stock of where you’re at financially, particularly as those post-December bills start rolling in. So perhaps you’d like to start by paying off debt or commence a savings plan for a new car or family holiday. The main thing is to be decisive and get advice early on to keep you on track to achieve your goals.
Setting (or reviewing) a realistic household budget
This will provide understanding of your finances and identify areas of unnecessary spending. It will not only assist in balancing your income and expenses but will help you clear debt and allocate money to other financial goals like setting up an emergency cash fund. Put a copy of your budget on your fridge, or somewhere your whole family can see or access it. This keeps things in perspective for the kids too.
Tidy up your filing cabinet
According to the Australian Taxation Office, you should keep financial records for five years from the date your tax return is lodged. Records relating to acquiring or disposing an asset, claiming a deduction for decline in value (depreciation) or if you are in a dispute with the ATO may have to be kept for longer. Other financial paperwork older than five years can be shredded, file everything else, including bills, invoices and bank statements. Remember that any filing system you implement should be quickly and easily maintained so you’re motivated to keep your records in order.
Review everything!
Start with insurances – life insurance and income protection policies. If it’s been some time since you look at these, now is the time to make sure your cover is current and more importantly – adequate! Get new quotes on your home and contents, car insurance and any other insurances to ensure you are always getting the best deal. We also recommend you assess your superannuation with the help of an adviser, also ensure that your nominated beneficiary/ies are current and up to date. Now is a good time to review your and consider if your circumstances have changed? While we’re experiencing record-low interest rates, do a few sums and work out whether you’re getting the best deal on your mortgage. Perhaps it’s time to renegotiate with your lender!
While the idea of setting a new year’s resolution is common, sticking to resolutions and accomplishing them are less so.
The key to achieving any goal is to be SMART about it:
S – be Specific. Clearly define your goal.
M – ensure it’s Measurable so you know when you’ve achieved it.
A – make it Achievable. Planning to complete a marathon in February may not be achievable if you’ve never run before.
R – be Realistic; could you really lose 20 kilos in a month?
T – set a Time by which you want to achieve your goal.
If you’re not sure where to start, your financial adviser or accountant can help you put processes in place to get your goals underway.
With a little planning and organisation, being clear about what you want to achieve, and mapping out how and by when you expect to achieve it, you’ll be giving yourself the best possible start to a successful year.
