The New Year is an excellent starting point for developing financial habits to help get ahead in 2018 and beyond. Better still, huge lifestyle changes aren't required to make a difference to your financial future. Just follow these five steps.
You need to stop and look at where you are now before you can do anything positive about the future. Start with a blank page and list how much you owe, who it is owed to, how much the monthly repayment is and what the interest rate is. Then list what your regular income is and your regular payments, such as rent, groceries, electricity, phone and internet.
Like many Australians, you may have a credit card hangover to contend with in 2018. There are a few ways to tackle this debt, including consolidating your loans at a lower interest rate, targeting debts with the highest interest rate first, paying more than the minimum repayment and reducing the number of credit cards you have.
Create some breathing space for when the unexpected happens. Set a goal of saving one fortnight's salary in an account as your buffer – this is just a starting point and can be increased later. Involve the whole family by making the goal visible and track your progress. A buffer is important so that loans and credit cards are no longer your go-to solution when something unexpected happens.
Super money is real money and by looking after it now, you'll have more later when it counts. If you have more than one Super fund you should look at consolidating into one. Make a conscious decision about the investments you choose inside your fund and consider adding extra to your super each week – $10 or $20 will make a difference over time.
Write up your action plan on a single page, based on the previous steps. Keep it somewhere visible so that you can stay on track. This should take the form of how much goes where and how often. Try not to think too far ahead and just focus on your plan each week or fortnight. Soon you'll see the results and how good it feels to be working towards your goals.
This article has been prepared by RACQ Financial Planning Pty Ltd ABN 35 116 361 650 Corporate Authorised Representative (Representative Number 293929) of Actuate Alliance Services Pty Ltd ABN 40 083 233 925 AFSL 240959. This document contains general advice and/or information prepared without taking into account any persons' investment objectives, financial situation or needs. Investors should consider whether any general advice is appropriate having regard to their financial objectives, situation or needs and read the relevant Product Disclosure Statement.