At the end of each year, many of us make New Year’s Resolutions, that, by February, are forgotten. If you’ve made financial resolutions for 2019, it’s time to get back on track.
Many people think that setting financial goals means giving up everything you enjoy in service of a single goal – to save money. In my opinion, this approach tends to fail, and I believe the secret lies in living for today while planning for tomorrow.
It means looking at your expenses and working out which ones you can reduce, and most people are surprised to find that it’s not always the social expenses that need to be cut. Many of us can save by making small sacrifices that won’t have a huge impact on lifestyle– making our own coffee, for example. And then there are bills that many of us regularly pay without reviewing – who wants to pay more for utilities or insurance than they need to?
Here are our tips for creating healthy financial habits that won’t see you giving up everything you enjoy:
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Know where your money is going
In a world of tap-and-go, it’s very easy for small costs to accumulate without you noticing. An app, like BeApt, that can help you track your spending can be a worthwhile investment to stay on top of it. That lunch you’re buying every day could be costing you around $50 a week – that’s $2600 a year. Even if you decide to bring lunch just half the time, you’re saving around $1300.
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Invest in your career
Invest in yourself – take a look at the skills employers want in the next level role and make a plan to build them. And when you get there, save 50% of your pay increase. You’ll still have more money today and be able to put some away that you won’t even notice because you didn’t have it before.
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Set financial goals and rewards
Set a target for how much you want to save and decide on a reward you will give yourself for achieving it; it might be a holiday or just something you’ve really wanted to buy yourself. You’ll enjoy it more when you’ve earned it too.
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Review your bills
Make time to look at your insurances, loans, utilities, etc, and shop around. Check what other offers are out there and talk to your provider about matching them – and if they can’t, make the change.
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Avoid credit cards
Visa Debit cards are a great alternative to traditional credit cards that allow you to use your own money in the same way you would a credit card. But if you are going to use a credit card, use it wisely. Don’t put anything on it that you can’t afford to pay off in full before the due date. When you consider interest over the lifetime of your debt, items you put on credit could be costing you 3 – 4 times as much. Next time you are going to make a purchase, triple the price of the item and decide if it’s still worth it.
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Protect your income
Most of us wouldn’t go without insurance for our house, car, or health, but many of us fail to protect our biggest asset – income. While adding income protection can seem like increasing expenses, you’ll actually be making a sound decision for your future. Get professional advice to choose your insurance, you want to make sure you’ve got the right cover for your circumstances.
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Pay off loans early
When borrowing money, make sure you can pay the loan off in half the suggested time. A lender sets the term to maximise interest; paying it off in half the time can save you a considerable amount of money. For example, looking at a $600,000 mortgage with 30-year terms at 5% interest, you’ll save $305,477 by paying it back in 15 years.
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Drive your old car for longer
Contrary to popular belief around reducing maintenance costs and getting tax breaks, a new car is rarely a good idea financially. If you don’t need it, drive your old car for a little longer.
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Don’t neglect your super
Putting extra money in superannuation can be a great way to reduce tax and invest in your future at the same time. Super is your money, and you should treat it as an investment that you want to protect and grow.
The most important thing when setting financial goals is to take action. Some people buy lottery tickets, hoping for a big win, but the only real way to get ahead financially is to plan for it. A good adviser can act as a financial coach to help you get there. Look for services that work with your lifestyle, like BeApt; a mix of personalised financial advice and ongoing digital support, so you can live for today and plan for tomorrow.
General Advice warning
The information provided in this blog does not constitute financial product advice. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. Apt Wealth Partners (AFSL 436121 ABN 49 159 583 847) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.
