2020 been one of the most difficult and unpredictable years for everyone and is just behind us. With 2021 the opportunity for a ‘fresh start’ it is also a great opportunity for making some new year resolutions to review your financial situation, check on your goals and set some new ones.
The key to achieving any goal is to be SMART about it:
Specific - Clearly define your goal. Measurable - so you know how to monitor progress and know when you’ve achieved it. Achievable - goals should be realistic and attainable - so design them to be challenging but still remain possible Relevant - goals must be appropriate to you – is it worth doing? Time-bound - with a target date by which you want to achieve your goal.
With a little planning and organisation, being clear about what you want to achieve, and mapping out how and by when you expect to achieve it, you’ll be giving yourself the best possible start to a successful year.
When setting resolutions, set your sights for where you want to be this time next year and which will allow you to review your progress towards them.
Now, you don't have to have all of these implemented day one!! Look for small daily targets can you commit to and break-down your goals into the small steps and processes needed, and this will drive you towards your end goal as you achieve smaller goals along the way.
Set aside time in your daily routine to work on your goals by booking time in your calendar. There are a number of awesome apps that can help you motivated and keep to working towards your goals such as to-do-list style apps like Todoist, Microsoft To Do and Any.do or habit tracking apps like Productive, Done, Strides and Today Habit tracker.
Small personal financial goals might include:
Continue Saving into the New Year Many Australians found themselves staying home more often this year while observing COVID-19 safety measures meaning individuals aren’t spending as much, travel, entertainment, and restaurant spending. When things get back to normal, make a plan to ease spending back into your budget carefully so you can keep your saving rate going strong.
Finally Create That Budget Collect all recent bank and credit card statements, as well as sources of income and spending to create a baseline of your income and expenses. With this baseline, you can start breaking down expenses into needs and wants, with the goal to weed out ‘wants’ that are negatively impacting your overall spending plan. Australians who need help creating and managing a monthly budget can use the MoneySmart’s online budget planner to see where your money is going and identify areas for improvement, there is also an Excel version if you prefer that format.
Schedule Regular Budget Check-ups Once you understand where your money is coming from and what it is going towards, stay on top of it and check-in regularly to make sure it is working for you. There are a number of budget and savings apps such as Pocketbook, MoneyBrilliant, Spendee, that track your expenses right from your smartphone, with other feature such as setting spending limits and reminders, and see your expenses at a glance.
Get the Kids Involved Good money habits and behaviours aren’t just for the adults in the household. Commit to helping your kids build a solid financial literacy foundation by teaching your kids! It’s never too early to start building good financial attitudes and behaviours and there are many free resources such as on the MoneySmart’s Teaching kids about money teaching resources for schools and the ATO's Tax Super and You are a great place to start.
Take Small Consistent Steps to Boost Your Savings 'A little goes a long way' is a great approach to build up savings over time. A great strategy is to make small deposits on a regular basis. It may not seem like much, but small deposits over a long period of time can yield huge results. An extra $10 a week deposited into a savings account will add up to over $2,600 in 5 years. If you can commit to $25 a week, you’d have over $6,500 in 5 years. Consistent small steps can quickly add up!
Make super one of your New Year's resolutions Making extra contributions to your super could be tax effective and give your super balance a boost. The earlier you are able to start making these contributions, the more time they have to accumulate – over 30 years, a relatively small amount like $20 a week extra may make a real difference. Get an estimate of the impact you could see in your super balance when the time comes to retire by using MoneySmart’s superannuation calculator.
Start an Emergency Savings Fund Disasters like wildfires, floods and even a pandemic can bring on unexpected costs or disruptions to our income. While these are at the extreme end of emergency’s, other examples might be unexpected car repairs, travel or urgent medical bills. Be prepared by having an emergency savings fund with three to six months of essential living expenses. Look for an online high interest savings account separate from your spending accounts so you won’t be tempted to use for everyday spending. Start small by contributing whatever you can afford as an automatic payment each pay period or month and build up the savings over time. If you get some extra money during the year, like a tax refund, you can use this to boost your emergency savings.
Protect Your Estate An estate plan may seem like something only for the wealthy, but there are simple steps everyone should take to make sure you protect your estate. Having documents in place—such as a will, an advanced medical directive, and an enduring power of attorney and guardianship—can make a challenging time more manageable for your loved ones. If you die without a will, the law decides who will get your assets — and this may not be who you want, leading to delays in those assets going to your loved ones as well as taxes and legal fees reducing what is left for them. Preparing your own will is NOT advised – as your trusted accountant we are now able to offer our clients a comprehensive estate planning service, tailor made to your requirements. Your plan is prepared through our partnership with the lawyers and specialist estate planning advisers from Abbott & Mourly . Don’t forget to check any life insurance policies are up-to-date and also your super arrangements, as your super does not automatically from part of your estate – you need to make sure you have a valid and up-to-date binding death benefit nomination.
Prepare Your Natural Disaster Plan Having a plan in place in the face of a natural disaster, will help to ensure you can focus on what's most important, while also minimising the financial impact. Make sure that you store important original documents that you need straight away like marriage or birth certificates, wills, powers of attorney in a fire resistant, waterproof safe at home or in a safe deposit box. Keep electronic copies of other documents on external hard drive, online storage or with solicitor. Resources to prepare you disaster plan are available through the NSW Rural Fire Service or the Red Cross which has a ‘Rediplan’ available in hard copy or via an app - Get Prepared.
We are not making a recommendation about any particular app in this article, just giving you some ideas to get you started but you should do your own research before deciding if any are suitable for you as well as confirming any costs (as some are free but also have premium paid versions available).
Important: The information contained in this article is not advice and should not be acted upon solely on the basis of the material contained. Contact HelloLedger for formal advice on how these impact on your personal situation and how before acting on anything contained in this article. We can help you follow through and work towards achieving your goals.
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