Most of us will start the new year by setting up resolutions or intentions for the year ahead. Although our aspirations might not be directly money related, financial stability and success helps us achieve our dreams – and live without stress.
If becoming your best financial self is on your radar, here are some simple tips to get you on the right track. It’s always best to start with little steps by making better daily choices which will snowball over time.
1. Take stock
Think about what went right and what went wrong last year. Consider what you should keep doing and what you need to work on in terms of your finances. Did you have financial resolutions in 2019? Did you achieve them?
Your spending habits are something worth understanding. Review your expenses over the past year by adding up your credit card statements or expenses in your bank accounts. Once you know what you have spent, you can think about whether you need to make changes.
2. Be inspired and set goals
Goals help you move in the right direction. They don’t have to be related to possessions or consumption, think about the things that inspire you and what you want 2020 to be about.
You might want to make more time for your relationships, think about your career progression, or plan a family holiday. Whatever you decide to focus on, make sure you invest in your health and wellbeing - you can only enjoy life, earn more and spend time with your loved ones if you have good health.
You goals might be related to your finances, so you need to get them in order and working for you so you can focus on what’s important to you.
Write your goals down – it will help you commit to them.
3. Deal with debt
Debt can help you grow, but it can also bring you down. Whether you are dealing with what we call “good debt”, like a student loan or a mortgage, or “bad debt” like credit card debt, make sure you have a plan on how you will pay it back.
By when would you like to be debt free and how will you get there?
If you have high interest debt, deal with it first. You can transfer your credit card balance by taking up a 12 months interest free offer from another credit card provider. Or if you have a mortgage, you can consolidate your debt. Click here to find out more.
4. Spend less than what you earn
This is the #1 rule – if you can’t stick to this one, then none of the other tips will help you. Earning more, by itself, won’t help you if your spending is out of control.
Case in point: Mike Tyson declared bankruptcy in 2003, despite having earned US$400 million over his career.
4. Talk about money
A big part of being financially healthy is being able to talk about money with your partner or spouse. Do you share the same goals? Do you agree on how money should be spent? You can only know if you take the time to talk about it.
Talk to your children about money as well, they will learn most of their financial lessons from you so it’s important to set a good example. If you are open to talking about how you manage your finances, they will be able to come to you for advice. To get you started, click below and we will email you a copy of our flyer "Are your kids in the right KiwiSaver investment?".
5. Protect yourself and your loved ones
Caring for your family also means looking after their financial stability, more so if they depend on your income.
Work on having an emergency fund available to cover 3 months’ expenses. Review your insurance to make sure you have the right cover in place for your current circumstances and that you are not paying for things you don’t need. Get your Will sorted.
7. Take action
These tips only work if you act now. Remember, it’s ok to start with small things rather than being over ambitious.
Check out our ‘Circle of life’ for a quick overview of all the pieces that make up your financial health puzzle. Reach out if there’s anything you’d like to discuss – we’re here to help.