Whether you thrived or struggled in 2020, the one thing we all learned was that it may be time to get on top of our finances and save for a rainy day.
Now that January 2021 has rolled around, and not much has changed since last year, it may be time to start building up some financial habits and set some goals.
Here are some changes worth making.
Some of us are great with budging. Most are not. In fact, allegedly 86% of Australians don’t know how much money they are spending each month! It’s time to change that and this is how your start.
1- Record all of your spending to see where your money is going. I suggest downloading an app to hep you such as Goodbudget, MoneyTree, Money Brilliant or Pocket Book
2- Work out what is important and what is not that you are spending money on. ie. do you need three TV streaming services? Do you need access to 5 gyms? Try to downsize where you can
3- Identify the items that are priorities. For example, if you can repay your debt faster, such as your credit card or mortgage repayments do so. The faster you pay it off, the less interest you pay
4- If you make extra money, save it. Just because you have extra does not mean you need to blow it on things that are unimportant. Create a budget that consists of how much you can spend on entertainment and stick to it. Even consider getting an extra bank account where you can put your additional money to keep it out of sight from yourself.
5- Make sure you set aside a “rainy day” fund for when life throws road blocks in your way ie. home repairs, poor health, insurance, an epidemic
Get your money to work for you
A lot of people leave the money in the bank doing nothing, but your money could be earning more money so do some research and/ or seek the assistance of your accountant or financial advisor.
You could be investing in property, shares, a managed fund, super. There are a lot of options
Set yourself up financially
To set yourself up financially it helps to goal set, but make it realistic such as saving $5K in 3 months. It is a good idea to set yourself up with a rainy day fund, especially in the world we live in now
Also try to pay off debt. The credit card especially. There is no use paying interest unless you have to so pay it off as soon as you can, and learn to budget
Gerry Incollingo, Managing Director of LCI Partners