Organising money and expenses doesn’t need to be painful. By pinpointing your goals and developing good habits you can work towards a strong sense of financial wellbeing.
With the lingering economic effects of COVID-19 in Australia, it’s no surprise many of us are concerned about our financial futures. Between mounting bills, unexpected expenses, a lack of understanding around our needs in retirement and getting our savings on track, all of this can feel overwhelming.
It doesn’t have to be. If you break things down into small, manageable actions, you can establish a simple plan to take short positive steps towards a healthy financial future.
1. Review your debts
For many Australian households, debt is a reality. Whether it’s a home loan, credit card, school loan, car financing, or a personal loan, it’s easy to lose sight of how much you owe and how much you need to pay back with interest.
Understanding your debts can enable you to devise a strategy for paying them off sooner and in the proper sequence, potentially saving you a lot of money. Take the time to manage your debts and determine your priorities, such as establishing a list of all bills and their amounts, and categorising them as “good” or “bad.”
2. Determine how best to pay your bills
It isn’t uncommon for someone to be unable to pay one or more bills on time in recent months, a reality that may be exacerbated through the warmer months, as extra air conditioning sees utilities rise.
One way to manage fluctuating bill amounts and unexpected rate spikes is to consider ‘bill smoothing’, a process that establishes automated payments of a set (and known) amount to cover utilities over the course of a year. Some utility providers offer assistance to customers where you can arrange to make payments fortnightly or monthly, instead of having to pay the whole amount in one go. Contact your provider to ask about setting up a bill smoothing arrangement.
3. Develop a savings plan
First bills, then savings – then you!
Contributing to a savings account before managing other home bills is a simple strategy to raise your savings and improve your financial future.
Setting up a second savings account with a high interest rate may also be a smart option. Then, at the end of the month, make sure that a certain amount of your pay, as well as any surplus in your day-to-day account, is automatically rolled over into your savings. When you automate your accounts, you can set and forget, and your savings will increase automatically every time money is added.
4. Review your super
The government’s Early Release Scheme in 2020 saw 3.5 million Australians take advantage of the ability to dip into their super early. Having access to this money relieved immediate financial hardship for many, but it was only a short-term fix. If you are falling behind with your super it’s important to be able to develop a plan now to set yourself up for the long term. A smart first step is to figure out how much money you’ll need in retirement – there is a lot of information to assist you with this – and then evaluate some of the options for rebuilding your super and decide which one is best for you. Our team of Financial Planners will be able to help you better understand your needs and plan for retirement. Get in touch today or click to find out more here.
5. Set goals
At what age do you want to be able to buy your first or second house? When do you want to retire? Do you know how much you need in your superannuation fund to retire comfortably? Many of us sweep these big questions under the rug but understanding them can help you prepare for your financial future. Once you’ve mapped out your current financial position and established your long-term goals, you can use a range of online tools and calculators to help you get there.
Most importantly speak to us to help get your savings goals on track, we are the experts in this field and we’ll make sure you head towards the future with peace of mind.