Set your savings goals for the coming year and take control of your future. Here are some tips to help make 2020 your best financial year yet.
Create a budget plan
Your money goals should be specific and realistic. Set up a plan and give yourself a timeframe by having measurable and timely goals.
If you want to save a certain amount by the end of the year, work out how much you can allocate to this goal when the paycheck arrives.
Start with basic costs — food, bills, transport, rent or mortgage, and any debts you’re paying off. Whatever’s left can go to your other money goals.
A budget planner is good for mapping out your finances and knowing where your money goes.
Savings
To reach your bigger money goals and cover you in case of an emergency, set aside savings. Each pay, work out how much you need to save.
An automatic recurring payment can be created to regularly transfer money into a high-interest savings account — which is easy to deposit into but hard to withdraw from.
Here are some tips to reach your savings goals:
- transfer spare funds to a separate savings account
- set up auto transfers to a separate savings account
- keep savings in an account you can’t touch
- build up funds in your transaction account
- deposit into your home loan offset account.
Get on top of your debts
One way to knock out your debts in 2020 is to break it down into manageable chunks and prioritise what you can pay first.
Make extra repayments on your smallest debt first. Then, move on to the next smallest, and so on. This way, you will be well equipped to knock them all out by the time you get to your biggest debts.
Or, pay off the debt with the highest interest first.
Financial counsellors can also help sort out your debts. They are confidential and independent.
Note: Always check your credit health. Get a free copy of your credit report and correct any errors immediately.
Superannuation
Your super is your nest egg for the future. You are paying multiple fees if your super is spread out across multiple funds — which will reduce your balance.
For you to pay less fees and grow your lump sum faster, consolidate your super into one fund.
Learn and check your super investment options and the life insurance it covers, if any.
You can also consider extra contributions to your super to grow your balance.
Investment
Do not invest in something you don’t fully understand.
Read up on the types of investment options you’re interested in. You can also follow investment and finance experts on social media for better strategies to invest smarter.
Growth assets (shares and property) that have better long-term returns. Be prepared to have your money tied up when investing:
- Short-term investments (1-3 years)
- Medium-term investments (4-6 years)
- Long-term investments (7 or more years)
Learn enough information on how an investment product works, check the fees & charges, and legal & tax issues.
You’ll hit your target and achieve financial freedom by setting your money goals, following a budget plan, and committing to keep your money on the right track.
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