Its the New Year and if you’re anything like me, you would have gained a few pounds around the waist and lost a few pounds in the wallet! It’s a yearly occurrence and most of us wouldn’t change a thing! With Christmas shopping and Boxing days sales out of the way, it’s time to assess the damage, so I’ve put a few pointers below on how to get ahead in 2017.
Set goals and make a plan – the first few months of the year are always a good time to plan for the year. Your plan needs to be clear and concise, i.e. pay off your credit card balance by 1st March and have $10,000 in the bank by 1st July. A plan needs to be discussed with all those involved as it needs to be agreed so that everyone is accountable.
Tracking progress is also a very important factor for your plan, i.e. check it monthly, quarterly, etc. Put the plan down on paper in order to track it more easily. If the plan isn’t working then it most likely is unrealistic, so you either need to be more disciplined with your spending or run through the budget planner again to tweak – however the latter option will mean the plan will take longer to achieve.
Within the plan, I have made a list of a few items you can start with.
Paying off bad debt, for example credit cards, needs to be first on the list due to the amount of interest charged. If the debt is too much to be cleared in one go, then another solution would be to consolidate/transfer the debt to a zero percent credit card. Many credit card providers offer a short term of approx. 12-18 months interest free for balance transfers.
Making overpayments on your personal/car loan should be next in line depending on the interest rate. Although it is important to save, paying off debt where you are paying interest makes more financial sense.
Once all your debts are cleared, it’s then time to start saving. To understand how much you can realistically save, you need to complete a budget planner. This will allow you to understand your income and your expenses equalling your savings amount. If the amount is not enough to reach your goal, the budget planner will allow you to identify where you could cut back. Having an emergency fund for unforeseen expenses such as medical or car/ home repairs is always good to have so that it does not disrupt the budget/plan.
If you have a mortgage, making over payments into your offset or redraw account allows you to get ahead and still have access to the cash when required. Small changes like paying fortnightly as opposed to monthly can help you overpay on your home loan too. If you do not have a mortgage then I would recommend saving into a savings account separate to your everyday account – this way you are less likely to dip in.
From a longer-term perspective, checking your superannuation and your insurances to make sure they suit your goals/requirements is advisable. If you haven’t already, organising or reviewing a will is worth looking into.
As always, I would always recommend talking to a finance professional, i.e. a mortgage broker, financial planner, accountant in order to help make this plan work. These professionals have the knowledge and expertise in assisting you to save money on your biggest and most important financial commitments as cheap isn’t always the best.
Business Success in 2017
Some businesses will do very well during 2017… so the question is will your business be one of them? The decisions you make and the actions you take at the beginning of the year will determine your level of success during the course of the year. All successful businesses take the following steps:
1. They establish business objectives for the year.
2. They measure performance against those objectives.
3. They take appropriate action if objectives are not being achieved. Having clear objectives is vital to your success: you are not likely to improve results unless you actively plan to do so. Moreover, being clear about your plan gives you focus and the ability to address issues and choose alternative courses of action when necessary.
If you want to start 2017 on the right foot, please join Enspira Financial (formerly Abby Practice) on Tuesday 28 February from 12-2pm for our workshop: “Setting Business Objectives for 2017.”
Raj Ladher is a local expert on mortgages and financial matters. Originally from the UK, his consultancy firm is now based in Sydney.