The End of Financial Year is looming and there’s no better time to get your finances sorted for the financial year ahead.
Put aside that guilt of giving up on your new fitness plan at some point in February, and focus on these 10 simple actions, which will help you take financial control during the next financial year.
- Budget, Budget, Budget
We’ve put this as #1 for a reason. Taking control of your income and expenses is crucial for financial stability. It doesn’t matter what state your finances are currently in; the first step to improving them is a budget and financial plan.A budget doesn’t have to be complicated to track how much is coming in and going out each month. Use a spreadsheet, download a budgeting app, like Fudget or Pocketbook, or refer to https://moneysmart.gov.au/ as a starting point. If you’re spending more than you’re earning, you need to do an honest evaluation of the things you need versus the items you want and update your budget accordingly.
- Follow the 80:20 rule
Savings should be a part of your budget; otherwise, you’ll never have any. Aim to put 20% of your income towards savings or extra debt repayments. The remaining 80% is for everything else, including your standard loan repayments. You’ll find this much easier to manage if you set up an ongoing automatic transfer (as soon as you get paid) from your wages account and nominate the 20% directly to a separate savings account or offset facility.
- Check all your interest rates
What interest rate are you paying on your mortgage? How about that car loan? Credit card? Hmmm. How can you prioritise paying off the highest ones first if you don’t know? Clearing your high-rate debt faster will save you more in the long run.
- Review all your subscriptions
Take a look at every service you subscribe to and see if there are any you could eliminate. It happens all the time; you sign up for a free 30-day trial and forget to cancel when the trial ends. You tell yourself you’ll cancel the subscription before the next automatic deduction, and life happens, and you forget yet again.
- Make a Will
So much can happen in a year, with anything from marriage to divorce, having children, or starting a new business. If you don’t have a Will, make 2022 the year to have it written. You don’t have to spend thousands of dollars on an expensive lawyer, as there are online will makers that cost very little, around $100. These include Quicken Will maker & Trust and LegalZoom.
- Review your insurances
OAs with resolution #5, a yearly review of your insurance policies allows you to explore how these changes affect your coverage needs and consider changes you might want to accommodate.
- Consider swapping providers
You’re probably paying out money to many different companies each month for phone bills, loans, utilities, insurance, etc. But are you getting the best deal from each of them? Try calling them up to say you’re considering moving to one of their competitors. They have whole teams of people whose job is to stop you from walking away, and you might be surprised at the incentives they offer to remain their customer.
- Minimise your fees
Financial providers don’t just make their money from interest; they also like to hit you with fees. If you’re being charged an extra cost every time you go to an ATM or purchase, you could save by changing your spending habits.
- Pay bills on time to protect your credit score
Late bill payments will undoubtedly result in extra fees and damage your credit rating. Stay on the right side of your providers by always paying early or on time. You can set up direct debits or phone alerts to help with this.
Some of these resolutions may require more time and commitment than others, but they are all very doable. Combined, they could be the most powerful End of Financial Year resolutions you’ve ever made. If you don’t know where to start, talk to us – we’re here to help!
