The dawn of a new year sees many people setting new year’s resolutions such as losing some weight or giving up smoking. Similarly, the beginning of a new year is the ideal time for setting financial goals, and here are four practical ways you can kick your year off to a great financial start.
1 – Decide what you want to achieve. January is perfect for taking stock of where you’re at financially, particularly as those post-December bills start rolling in. So perhaps you’d like to start by paying off debt or commence a savings plan for a new car or family holiday. The main thing is to be decisive.
2 – Setting a realistic household budget will provide an understanding of your finances and identify areas of unnecessary spending. It will help you make more informed decisions about what you chose to spend your money on. This will not only assist in balancing your income and expenses but will help you clear debt and allocate money to other financial goals like setting up an emergency cash fund
3 – Tidy up your filing cabinet. According to the Australian Taxation Office, you should keep business financial records for at least five years, starting from when you prepared or obtained the records, or completed the transactions (or acts they relate to), whichever is the latter. They also need to be in plain English and in a way the ATO can access if they need it. If you’re unsure you can check out the ATO’s record keeping evaluation tool for your business records[1]. Shred financial paperwork you are no longer required to keep and file everything else, including bills, invoices, and bank statements. Remember that any filing system you implement should be quickly and easily maintained.
4 – Review your paperwork; start with insurances – life insurance, house, car, etc. Are they current and are you adequately covered? Are your premiums appropriate for your level of cover? Assess your superannuation and nomination of beneficiary. Is your Will up to date or have your circumstances changed? While we’re experiencing record-low interest rates, do a few sums and work out whether you’re getting the best deal on your mortgage. Perhaps it’s time to renegotiate with your lender!
While the idea of setting a new year’s resolution is common, sticking to resolutions and accomplishing them are less so.
The key to achieving any goal is to be SMART about it:
S – be Specific. Clearly define your goal.
M – ensure it’s Measurable so you know when you’ve achieved it.
A – make it Achievable. Planning to complete a marathon in February may not be achievable if you’ve never run before.
R – be Realistic; could you really lose 20 kilos in a month?
T – set a time by which you want to achieve your goal.
If you’re not sure where to start, your financial planner can help you put processes in place to get your SMART goals underway.
With a little planning and organisation, being clear about what you want to achieve, and mapping out how and by when you expect to achieve it, you’ll be giving yourself the best possible start to a financially successful year.
[1] https://www.ato.gov.au/Calculators-and-tools/Record-keeping-evaluation/
