Why the new year is the best time to think about your finances
It's great to set yourself some fitness, health, travel or career goals, but don't forget about your finances.
New year, new you? While you're setting yourself some health, family or work-related goals for the year ahead, don't forget about the F word – that is, your finances. Just like your physical and mental health, your financial health plays a big role in your overall wellbeing.
Whether they're joint financial goals with a partner or individual goals, it's important to set some time aside to focus on them at the start of the year. Here are five strategies to get your finances set up now to ensure your money is working harder for you this year and beyond.
1. To get started, look for some #finspo
A lot of us are suddenly motivated to join the gym or sign up for a yoga membership when scrolling through social media and seeing all the #fitspo content. It may not be quite as exciting, but looking for some financial inspiration (or #finspo, as I'm calling it), could be a great way to get yourself motivated.
If you want to buy a house this year, maybe reading about how other people in a similar position to you bought their first property will help you get started. Or if you want to learn how to start trading shares, you could listen to some investing podcasts and hear from people who were beginners themselves not long ago.
But remember, it's important to be realistic. Just like you won't get rock-hard abs overnight, you're not going to get rich overnight either (unless you happen to win the lotto, of course).
2. Make a plan to pay off your debt (if you have any)
Before you put your money to work in an interest-earning product like a savings account or term deposit, consider paying down any high-interest debts that you have. The interest you're paying on a credit card bill or personal loan will be far greater than the interest you'll earn in a deposit product, so it makes better sense to deal with your debt first (even though this isn't as exciting).
I'm not saying you have to start the year by immediately paying off all your debt because this is often unrealistic. However, you should try to start the year with a clear plan for how you're going to pay off your debt and by when. Having this plan written down somewhere that you can see every day will keep you motivated. For example, you could keep a running tally of it on your fridge or on your mirror.
3. Put some money away where you can't touch it
Opening a term deposit at the start of the year is a great set-and-forget savings strategy for the year ahead. Having some money locked away in a term deposit that you don't have everyday access to is an effective way to stop yourself from using the money on impulse purchases throughout the year.
Plus, not only will you be safeguarding the money from yourself, you'll be earning interest on your deposit. For example, Judo Bank offers a fixed interest rate of up to 2.40% p.a. on deposits starting from just $1,000. It offers term lengths from six months to five years, so you can select a term that suits your financial goal.
By opening a 12 month term deposit now, you'll get the money back plus interest this time next year. It'll be kind of like finding money you left in the pocket of a pair of jeans you haven't worn all year, but better.
4. Look at all your bills and compare
Setting yourself a few hours at the start of the year to reassess all your bills is something you should make time for each January. To get started, find your latest phone bill, electricity bill, Internet bill, car and/or health insurance bill as well as any other bills you pay on a regular basis. Then, one by one, get online and compare providers to see if you can find a better deal.
If you can't find a better deal or if you want to stick with your current provider, this doesn't mean there aren't savings to be had. Call them up, say you've been a loyal customer and plan to continue to be a customer this year, and then ask for a discount. I know waiting on hold and speaking with the customer service team for your energy or Internet service isn't a fun task, but the potential savings will be worth it.
5. Give your superannuation some attention
I know whenever I say the word "superannuation", people immediately switch off, but stay with me. This will be a lot easier than you think, I promise.
As a first step, all you need to do is look at your current super balance and check what fund (or funds) you're with. Once you've found this, dig a little bit deeper and find out how much you paid in fees last year (this should be available in your latest statement or by logging into your account online).
Take a quick look at how these fees compare to other super funds. If you're paying a lot more than you would be with another fund, it could be time to switch. If you've got two funds open in your name (or even worse, three!), it's really important to select which one you want to keep and consolidate the other over into that fund. This way, you can start the year knowing that you're not paying multiple sets of fees unnecessarily.
If you are struggling with your personal finances, consider speaking to a professional financial counsellor by calling the National Debt Helpline on 1800 007 007.
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