For many people, the New Year signifies a fresh start. We’re recharged, refreshed and more optimistic after a relaxing break with our loved ones, and ready to kick some financial goals for the New Year. Here are my top 5 tips on how you can start your own financial health check:
- 1. Set clear goals – they must be specific, and realistic. Pick 5 things you want to achieve this year. Write them down and stick them where you will see them every day. Don’t try and do too much, you’ll never achieve it all.
- 2. Draw up a budget and live within your means
It sounds straightforward, and it is, but many people struggle to get on top of their spending each month. A simple rule of thumb to spend less than you earn is as follows:
- Calculate your total annual income after tax, and then your total annual expenditure
- Divide each by 12 to get a monthly average
- Do some re-jigging to ensure you’re earning more than you spend
** Make sure you factor in an amount for savings within your expense column. Always pay yourself first.
- 3. Saving for a home purchase
If you’re saving for a home deposit, a minimum you should allow is 10% of the price, plus purchase costs of approximately 5%, so 15% would be an ideal minimum deposit required, to avoid hefty mortgage insurance fees.
- 4. Paying off your home loan sooner
If you have a home loan, using an offset account could save you thousands of dollars in interest. You can have your salary credited to this account, and all of your savings, and this all helps to reduce your loan interest and pay your loan off faster.
It is also a good idea to make weekly or fortnightly repayments. You can also set up an automatic direct credit for $20 per week into the loan, you’ll be amazed at how quickly the balance will come down.
- 5. Pay off debt with the highest interest rate first
Always pay off debt with the highest interest rate first. Once you’ve paid it down, whether it be a credit card, car loan or personal loan, reduce the limit or close it off completely. Any non-tax deductible (investment debt) will not help you get ahead in any way.
We have a great budgeting tool we can share with you. Please email me to receive your free copy.
For more information, please call Monica van Riet on 03 9681 8182 or 0401 677 314. You can also email email@example.com