Ever looked at a colleague or friend who has everything together financially and thought ‘what’s their secret?’ Here are five habits you can implement to help achieve financial security.
Believe it or not, being secure financially doesn’t involve magic or an outrageous stroke of luck. More often than not, it results from good habits, such as keeping track of your finances, cutting back on expenses, and planning ahead.
Habit one: Set goals
It’s time to take control of your financial security and a great place to start is to identify short, medium, and long-term financial goals.
These might be saving for a family holiday, making additional contributions to your superannuation, paying down your mortgage in 10 years, savings for your children’s education.
Make the goals specific in terms of when you want to achieve them and how much it will cost.
Habit two: Create a budget
Creating a budget is an incredibly important step to achieving your goals as you work towards your financially security. And it’s easier than you think when using a good budgeting tool. There are plenty of helpful apps and websites out there to choose from.
A very simple one is ASIC’s MoneySmart Budget planner. Our clients typically use the electronic budget built-in to myprosperity.
- Calculate your household’s monthly income: Look at your payslips or bank statements to see how much is going into your account on an average month.
- Tally your monthly expenses: Check your bank statements, bills, and receipts to see how much you’re spending. Don’t forget to factor in the big ticket items you purchase less often.
- Remember your goals: Make an allowance to put some of your income aside to achieve your goals. Can you afford to save 20% of your income or do you start a bit lower?
- Crunch the numbers: You’ll now have a summary of how much you’re saving, or losing, each month. Don’t forget to save a copy.
- Find saving measures: Boost your savings, identify, and cut back on unnecessary expenses. That might include take-away coffee, restaurants, or subscription services you rarely use. The first few months of sticking to your budget will be the toughest, so start by setting a realistic budget.
Habit three: Optimise your bank accounts
Give your saving efforts a big boost with the checklist below:
- Streamline banking – Get paid into an account that’s not accessible by debit card. Pay off your monthly essentials first, then transfer your budgeted savings into a separate account.Finally, only put as much as you’ll need in a spending account. That’s this month’s budget.
- Bank fees – How much are fees eating into your savings and spending accounts? If you don’t know, find out, then shop around for a better deal.
- Credit cards – Tackle your outstanding credit card balance, check to see if you own any credit cards you no longer need. The sooner you can stop using them and pay off the balance the sooner you will have extra money to put towards your goals. Remember late payment fees and interest can really put a dent into your savings.
Habit four: Track your spending
You need to keep your eye on the ball at all times. That’s because it’s one thing to create a budget and set financial goals, but entirely another to stick to them. So set aside 15-30 minutes each week or fortnight to make sure you’re keeping on track.
This regular review is also a good opportunity to identify any expenses you don’t really need. This is where we find an electronic tool like myprosperity or Moneysoft is very useful to track your progress.
Habit five: Plan for the unexpected
Your income is fundamental to achieving your financial goals, so for financial security you should be confident that you have adequate protection in place.
Ask yourself how quickly you would burn through your savings if you were unable to work for three to five months? Or even longer?
By having different types of insurance you can help protect yourself and your family when you need it the most. Taking out the right cover for you means that you can be confident that if something unexpected did occur, your efforts to become financially secure are protected.
If you’d like to explore some options to help meet your financial goals or review your current financial measures that in place, reach out and get in contact with us.
Yves@affluenceprivate.com.au or 0432 885 295
As I understand your time is extremely valuable and scarce, I am able to offer flexible meetings times, including outside business hours and during the weekend. I can even come and meet you somewhere convenient, or talk via videoconference on Skype.
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Please contact me on firstname.lastname@example.org or call me direct on 0432 885 295. You can follow me on Twitter @YvesSchoof or connect with me on LinkedIn to receive new articles.
Yves Schoof and Affluence Private Wealth are Authorised Representatives of Synchron, AFS Licence No. 243313.
The information posted is intended to be general in nature and is not personal financial product advice. It does not take into account your objectives, financial situation or needs.
Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. In particular, you should seek independent financial advice and read the relevant product disclosure statement (PDS) or other offer document prior to making a decision.
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