Hello 2018! Top five FinFit tips to make this year count.
Happy New Year! We hope you had a lovely Christmas and New year with family and friends. We love the start of a new year as it is the perfect opportunity to start fresh and work out your personal and financial goals for the year.
You have 12 new chapters and 365 new chances. What can you do to make it count?
Achieving financial fitness is an admirable goal, but very few people know where to start. If you’re starting to take steps towards financial fitness this year, here are five tips you should follow to set financial goals for the new year.
1. Give yourself a Financial Health Check
When did you last review your finances? Have you ever had a Financial Health Check to assess the level fitness of your finances?
Can you honestly answer the following questions –
- Are you maximising your income?
- Do you have a budget and monitor it monthly?
- Do you have an investment plan?
- Do you know the return on your Superannuation last year and where it is invested?
- Do you have a list of your personal and financial goals?
- If something was to happen to you is your family fully protected?
- Do you know when you will retire and how much you will need to fund your lifestyle?
- Do you have a home loan, if so what is the rate? Does it start with a 3, 4 or 5?
- Do you clear your credit card each month?
- Do you have a Will and Power of Attorney?
This is a very simply health check and if you answered ten out of ten Congratulations!!!! If not this is a great place to start and work your way through the list to reach your peak.
2. S.M.A.R.T. Goals
S.M.A.R.T. goals are a great way to really understand your goals and how to measure them.
The acronym stands for: Specific, Measurable, Achievable, Relevant and Timebound.
I live and breathe by having SMART goals.
If it doesn’t challenge you it won’t change you.
S – Specific
When setting a goal, be specific about what you want to achieve. Think about this as the mission statement for your goal. This isn’t a detailed list of how you’re going to meet a goal, but it should include an answer to the popular ‘w’ questions:
Who – Consider who needs to be involved to achieve the goal. Is it just you or is it a family member your partner?
What – Think about exactly what you are trying to accomplish and don’t be afraid to get very detailed.
When – What is your timeframe? When do you want to achieve your goal?
Where – This question may not always apply, especially if you’re setting personal goals, but if there’s a location or relevant event.
Which – Determine any related obstacles or requirements. This question can be beneficial in deciding if your goal is realistic.
Why – What is the reason for the goal? Why do you want to achieve it?
M – Measurable
What metrics are you going to use to determine if you meet the goal? This makes a goal more tangible because it provides a way to measure progress. If it’s a project that’s going to take a few months to complete, then set some milestones by considering specific tasks to accomplish.
A – Achievable
This focuses on how important a goal is to you and what you can do to make it attainable and may require developing new skills and changing attitudes. The goal is meant to inspire motivation, not discouragement. Some goals will be short term and others will take longer to achieve depending on the size of the goal.
R – Relevant
Relevance refers focusing on something that makes sense with the broader goal.
T – Time-Bound
Anyone can set goals, but if it lacks realistic timing, chances are you’re not going to succeed. Providing a target date to achieve it is imperative. Break your goals up into three categories for the short term, medium and long term.
3. Set a budget and stick to it
Budgeting comes down to three things: what you earn, what you spend and what you save. It sounds so simple but needs allot of focus and discipline. A budget is a great way to actively record where you are spending your money and look for opportunities to make change.
Another great way to help you budget is to separate your money into different buckets/accounts. The time to start saving for Christmas 2018 is now. What is your budget for presents, Christmas celebrations and holidays? Don’t rely on credit to fund yearly events plan early.
Have separate accounts for bills, holidays, savings, Christmas and your goals. Do your research on your options for cash accounts with no fees that can help you seperate your finance. A couple of examples are Macquarie and ING Direct. If you have a home loan you should also check how many offset accounts you can link to it to make the most of offsetting your interest while managing your cash flow.
There are also some awesome apps to help you track your money. We have our very own Wealth Portal that helps track your cash flow, achieve your goals, watch your net wealth grow and help you at tax time. There is also a great budget planner via the Money Smart site that can help you track your money.
In the words of Warren Buffett – Do not save what is left after spending, but spend what is left after saving. You should always pay yourself first!
4. Set up an Emergency Fund
Do you have an emergency fund in case something happens, and you need money? It is so important to have an emergency fund, so you don’t need to go into bad debt. I recommend you should have at least three months of net pay in an emergency fund at any time.
5. Review your Debt
Do you know your home loan interest rate? If it does not start with a “3” you are paying too much. Unfortunately, banks are great at offering new customers an awesome rate but do not give the same rate to loyal long-term clients.
Do you clear your credit card each month? If not there may be options to look at transferring it to an interest free credit card and put a plan in place to pay it in full so you are not paying high levels of interest. If you can’t repay the card in full each month you should cut it up and not use it.
We offer complimentary home loan reviews to make sure you have the best product for your needs and doing all you can to pay it off as soon as you can.
I hope these simple five steps help you plan your 2018 and make every day count!!!!! Remember you have 12 new chapters and 365 new chances. Make it count!!!!
Hope you have a sensational 2018 and smash all your goals.