If you want to start your new year right setting yourself some personal finance goals is a great opener. Here are YBI’s top financial hacks to kick off 2020.
Ah…new year’s resolutions… We all make them and we all break them. In 2020 instead of kicking off the new year with empty promises to yourself, why not plan ahead instead?
The benefits of setting goals are well known. They allow you to clearly focus on what’s important, so you can set a direction and outline for how you will reach your destination. Goal setting helps to motivate you to achieve your purpose. Whether that is to save money for a new car, purchase a home, set yourself up for retirement or simply put aside funds for a holiday. If you have a vision and a goal you are far more likely to achieve your dreams.
When people set themselves financial goals, their first misstep is often they are unrealistic. Even if you want to set up a goal to make a big purchase such as buying a house, it’s important to approach the task by breaking it down into manageable and realistic targets. Setting smaller realistic goals will help you to work towards the big picture.
Set yourself a budget
One of the best skills you can ever teach yourself is how to budget. Budgeting is one of the essential ingredients to financial success. Setting up a budget will allow you to see exactly how you are spending your money and where you can potentially make savings. While you are at it, pull out your bank statements and reflect on your spending. Check your direct debits – you may find you have old subscription services that you no longer use still taking chunks out of your disposable income. Work out how much money you need to cover your bills such as mortgage or rent payments and utilities and how much you have for discretionary spending and how much you can save. Be realistic. There is no point in being so frugal you have no luxuries or niceties, as you will likely find living like a monk is ahard lifestyle to maintain. Above all, you want to be able to stick to your budget so don’t slash items you know you can’t live without. Try to get the whole family involved in your budget as this will help increase your likelihood of keeping it.
Pay down your debt
If you really want to improve your financial circumstances in the new year then getting control of your debt is another item to add to your hitlist. If you have considerable debt then you need to focus on how you can pay it off faster in order to reduce the amount of interest you may owe. If you’ve done your budget, then you will know where you can make savings or what expenses you can cut back. Use this money to pay down your debt. If you have no wriggle room in your budget, it could be time to consider what items you could sell to help you pay off what’s owing. Or perhaps you could consider a side hustle or a part-time job in the gig economy and use the funds you make from this venture to pay down what’s owed.
Save save save
They say you should be saving at least 10 per cent of your income every month. If you do this you will soon reap the benefits. Not only will it ensure you have money put aside should an emergency hit, you could also contribute the money to your super fund – reducing your retirement prospects in the long term. IF you are struggling to find a way to save money then it could be time to take a closer look at your discretionary spending. Sacrificing a few dinners out and movie dates could be just what you need to do to start kicking money into your savings.
Do your homework
If you want to really understand how to turn your personal finances around, it pays to do some research. Sign up to newsletters and websites that offer free financial advice, enrol in a personal fiancé course, start reading up on finance by checking out popular books such as The Barefoot Investor, and finally, see a financial adviser to map out what the future could be like if you set yourself up with a plan and some goals.