The new financial year is a good reason to get organised on your money and to break-up with old habits that are no longer adding any value to your bank account.
For me this means, going through bank statements and looking at my transactions and reviewing any subscriptions or direct debit plans that aren’t giving me enough bang for my bucks.
Recently I discovered that I was paying out $30 a month for a social media business account that I wasn’t using. So I deleted the account and moved onto all the other aspects of my financial life that needed attention.
Steven Korner, financial planner at Omniwealth says often the most common areas that could do with a financial year spruce up include:
Eliminate personal debt. Australia has some of the highest personal debt levels in the world and it is only increasing. Some of these debts are incurring interest at over 20 per cent. Personal debt is considered bad debt as it does not produce income for you, it diminishes your long-term wealth. Paying this off as fast as possible will propel you on your path to financial independence.
Take control of your super. Superannuation is your nest egg for retirement. Too many of us have super spread across multiple funds. Consequently, this means that unnecessary fees are diminishing our future.
This is the financial year to consolidate your super and take back what is yours!
Review your home loan. Interest rates are currently at record lows, despite this, many banks are still charging their customers an arm and a leg in interest. Speak to a mortgage broker to take advantage of the highly competitive interest rates some banks are offering. This could save you thousands of dollars a year in interest repayments.
Protect your income and assets. Australians will not hesitate to insure their car but will not insure themselves. You are your most valuable asset. Ensure you have appropriate levels of personal insurance in place, such as life and income protection, to protect yourself and your family in the event of unexpected injury or illness.
Construct a savings plan. Sit down and determine how much money you want to save this financial year. Now, divide this number by 52 weeks. Congratulations, you have just created yourself a weekly savings goal. Think about things you could easily substitute out of your life in order to achieve this. If you were to stop buying your morning coffee this financial year you could save yourself an upward of $1,400!
Plan and begin to achieve your financial targets. Most of us fail our financial year’s resolutions because we do not keep ourselves accountable to our goals. A Harvard University study found that only 3 per cent of students had both written goals and concrete plans. However, this 3 per cent were making ten times more than the rest of the 97 per cent of the class after 10 years. Schedule yourself one hour to write down your goals and how you are going to achieve them. Revise this every six months and the results will speak for themselves.
