So you’re ready to fix your finances? Here are some tips and tricks to help you hit the ground running!
Stick to a budget
The best place to start is by setting yourself a budget. A budget isn’t about constraining your finances and lifestyle choices, but more so about taking control. Having a clear perspective on where your money is going will help you direct it in ways that will allow you to reach your goals.
There are plenty of ways to create your budget. One of the most popular strategies is the 50/30/20 rule whereby 50% of your income is allocated to needs, 30% is allocated to wants and 20% is allocated to savings. This is a very general guide that may not work for your circumstances but is a useful place to start if you haven’t set up a budget in the past.
Set yourself goals
If you are on a mission to fix your finances, you should be listing out your short and long term goals. Before getting carried away with the exciting goals, you should consider goals that address any outstanding debt including car loans, student loans or credit cards.
You can then start thinking about your big savings goals. This may include saving for your first home, investing in shares, holidays or renovating. Make sure your goals are SMART goals – specific, measurable, achievable, relevant and time-bound. Once your goals are set, you will be more confident in your cash flow and how to create a plan to help you reach them.
Create an emergency fund
As a result of the pandemic, more Aussies are now opening up emergency funds to prepare for the unexpected. It is important to have a strategy in place to cater for emergencies such as unexpected medical expenses, losing your job or car-related expenses. We recommend putting aside some funds in a separate account so that your everyday expenses aren’t impacted if an emergency was to arise. This way, you won’t have to deal with the added financial stress if you do find yourself in an unfortunate situation.
Review you superannuation
Any review of your finances should involve looking at your superannuation. First of all, check that you have all of your super in one account. If you have multiple accounts, you will need to consolidate your accounts to improve visibility and minimise fees.
You can also review investment choices within your super to see if you have allocated personal insurance, life insurance and income protection. These types of insurance may be benefitting you or they could be hindering you if you have invested in this outside of your superannuation.
Protect yourself
There are several ways that you can protect your financial future. You should consider life insurance and funeral benefits to ensure that your loved ones have a safety net if anything unexpected was to happen. You can also consider income protection to protect yourself if you are unable to work because of an accident or sickness.
Make a strategy for growth
The final step is making a plan to help you improve your financial wellbeing and grow your wealth. One of the safest and easiest ways to grow your savings is through a Term Investment. You can lock in a competitive interest rate and watch your savings grow over the term. With APS Term Investments, you can earn up to 4.00% p.a. – all you need to do is choose your term and watch your savings grow!
You may also choose to invest in property or purchase shares, however, we advise speaking with a Financial Planner before making any decisions about investing. The team at APS Financial Planning will be able to support you in making smart decisions based on your current financial situation and your goals.