You may be one of the millions who made a resolution this year – are you going to take action to make it a reality? If taking control of your finances is on the top of your list, these tips will help you on your way.
Tip 1 – Clearly state your goal
Example – pay off the credit card and keep the balance paid each month; save for my wedding, house deposit or overseas trip; be ready for retirement etc
Write down the amount of money you need to meet the goal. Remember, you have 12 months to get there.
Tip 2 – Know what you earn, and what you spend
Most of us think we know what we spend each year, but are really surprised when it is written down and added. Don’t leave anything out – coffees on the way to work, lunches, gifts for family and friends, groceries, household bills etc.
Tip 3 – Write a Budget
There are 2 ways to have more money available for your goals – 1. Earn more money or 2. Spend less. Earning more money may mean taking a second job, selling things you no longer need, taking in a boarder, as examples. Spending less, means working through all those costs you identified and prioritising them. A budget is a simple summary of your income and expenses on a regular basis and it is the simplest way to manage and plan your finances, and the easiest way to find those extra dollars to help you achieve your goal.
Tip 4 – Smaller targets are easier to hit
If you know how much you need to save eg, $10,000 for your holiday, then breaking it down into smaller weekly amounts will make it more likely that you will save. It is much easier to find $50 each week, than $2,500 in a month for the airfares! The earlier you start to save, the smaller the weekly amounts need to be.
Tip 5 – Be realistic
If your budget shows $50 per week available for saving, don’t try to squeeze $100 out every week. If you eliminate all of the fun things in your budget, you will stop saving and never start again. Make the saving amount manageable.
Tip 6 – Stick with it
Don’t get $500 saved towards your holiday and celebrate by spending $450 on a new television! Re-visit your goal and remind yourself what you want to achieve for the whole year.
Tell your accountant or advisor about your goal and let them help you work towards it. Good luck.