People get a personal trainer, they get meals delivered, but when it comes to financial advice, they get shy.
As a financial adviser, I want to normalise talking about your money and life goals because that is how you make them a reality.
And, there is no time like the present.
Here are my top 10 finance tips for 2023
Talk about your money. Getting ahead comes down to being financially literate. If you don’t discuss, read and understand how money works, then you are already behind. Almost two-thirds of Aussies cannot answer five basic financial questions.
Check your fees. Read the fine print and know how much your accounts cost you. Do you know what the tally of your super fund fees are? If not, now is a good time to check that you are not paying more than you need to. After all, every dollar out of your super reduces your compound interest power.
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Start an emergency fund. Don’t put it off. Having enough money in the bank if you get sick, or something goes wrong is never a bad idea. It is recommended that you have three to six months of salary set aside. So if you are on the average Aussie income of $92,000 a year, that means you should have about $17,000 put aside. Don’t worry if you don’t yet, but work towards it.
Pay off your debt – or at the very least pay more than the minimum. Debt, particularly bad debt, is a bit like a terrible hangover – it affects everything: your credit rating, your ability to borrow and your ability to buy. If you are overwhelmed by how much you owe, you can also look at consolidating your debt into a loan with lower interest rate payments or transfer to a 12–24 month free credit card while you pay it down.
Setting savings goals. Here’s the thing, saving just doesn’t happen on its own. It requires diligence, discipline and a plan. Work out how much you want to save and what you want to save for and then break it down into manageable bits – e.g. saving for a home deposit of $80,000 would take you four years if you put aside $420 a week.
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Be on the best rate. Paying interest is not paying off your home, so every little .01 per cent could be adding thousands to your mortgage each year. Shop around, know how much you are on and know which rates are competitive.
Get covered. Income protection and health/life/trauma insurance are all important support systems to understand and consider, especially if you have a family. I can’t tell you how many times I have spoken to clients who are so grateful they planned for the worst. You never need it till you need it, right?
Live on less than you earn. It’s an oldie but a proper goodie. You can’t get ahead if you’re spending more than you’re making. And though it is tempting to spend more each time you get a pay rise, it is better to invest or save that extra amount – the same with any bonuses or unexpected windfalls you might get.
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Treat yourself. Have you heard of the 50, 30, 20 rule? It normally goes like this. You spend 50 per cent of your income on your essential costs, 30 per cent on you and 20 per cent on savings. I like to split it slightly differently: 50 per cent same (essentials), 35 per cent savings and 15 per cent on you. If your take-home pay is $1300 a week, then $650 on essentials, $455 savings and $195 on you.
Plan for the future. The retirement age might keep getting moved, but at some point in your life you are likely to want to stop working. When that happens, you will want a comfortable life, and planning for that starts today. There are a few factors to consider here.
1. What kind of retirement you want and how much you’ll need for it. 2. Where will you live? It’s much easier if you own your home when your retire. 3. Your nest egg that will provide for emergencies and plans. This is unique to everyone but starting thinking about it today.
The bottom line
As a financial planner, I am human too.
I don’t always make the right choices but I know my comfortable financial future begins today.
And, if I break it down into small manageable steps, even the biggest goals become possible.
This article originally appeared on Expert Analysis. It is republished with permission.
Do you believe you have a high degree of financial literacy? Are there any other tips you can add to those above? Why not share them in the comments section below?
Financial disclaimer: The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions.
