by Erika Jonsson The start of a new calendar year remains a time when many people set goals and consider their financial position.
The reality is, you don’t have to wait for a new year, a new month or even next week to start this process.
Here are 6 ways to kick-start your finances – at any time of the year.
1. Review your budget (income and spending)
Figure out how much spare cash you could realistically set aside each week or month.
There are plenty of free budgeting tools online that can help you track your spending, identify areas for improvement or change, and work out how much cashflow you have left to save.
ASIC’s Moneysmart Budget Planner is a great place to start.
2. Reduce your debt
If you’re burdened with expensive debt (particularly things such as credit cards or personal loans) consider reducing or eliminating those debts as much as possible.
While personal debt nationally has dropped significantly during the COVID-19 pandemic, credit card debt in Australia still sits at nearly $18 billion – and that doesn’t factor in buy-now-pay-later services like Afterpay.
Extra payments can make a big difference. Here’s an example using ASIC’s Moneysmart Credit Card Calculator. If you have a $5k credit card balance with an 18% interest rate and pay the minimum payments, it will take you 33 years to pay off the debt and you’ll pay $17,181 in total! By paying an extra $102 a month on top of the minimum payment, you would reduce the borrowing period to seven years and three months and save more than $8,300 in interest.
3. Automate your savings and investing
It’s important to have a regular savings pattern and stick to it, whether you put $100 a month into an investment account or make voluntary contributions to your superannuation.
It can be helpful to set up a direct debit or some other automatic payment so that the money is put away without you having to do anything, otherwise it could fall by the wayside when you get busy.
Tip: Six Park clients can automate their investing by setting a threshold amount – any time your available balance reaches that threshold, your funds will be automatically invested into your portfolio.
4. Set specific goals
Lots of people make new year’s resolutions, but there’s a difference between a dream and a goal.
Having specific goals helps to keep you focused on what’s most important to you and motivates you to continue saving.
When you’ve worked out how much you can save, pay off any credit card debt first, and then set some other goals to save for.
Short-term financial goals may include saving for a car or a holiday, such as a car or a holiday, as well as long-term financial goals such as saving for a house deposit or for your retirement.
Tip: Six Park has a free goal explorer that allows you to model how much you might need to invest and for how long to potentially reach your goals. So, for example, if your goal is to invest $5,000 in your Six Park account each quarter, you’d need to save $1667 each month for three months. You can then see how your investment might grow over time.
5. Review your fees and providers
Whether it’s investing, your household bills or your mortgage, it’s important to regularly review what you’re paying for different services.
Comparison sites can help with utilities and interest rates, while a mortgage broker may be able to help you secure a better deal on your home loan.
When it comes to investing, small differences in fees can have a big influence on returns.
Investing in diversified, low-cost index funds (ETFs) may materially lower your investment expenses versus actively managed funds or actively trading yourself.
6. Search for lost super
Do a search for lost super by visiting the Australian Taxation Office website. According to the ATO, there’s almost $14 billion in unclaimed super accounts in Australia, as many people lose contact with their funds when they change jobs, move house or fail to update their details with their super fund.
If you have more than one superannuation account, it may pay to roll the funds into one. This can reduce fees and make your super easier to track.
The commentary in this article is general advice only. It has been prepared without considering your objectives, financial situation or needs. It is not a substitute for financial advice.