1. Wipe the slate clean
Re-do your household budget, so you know exactly what your income and expenses are for the next 12 months. The Government’s Money Smart website has a great online budget calculator which can help you crunch the numbers. The rule of thumb is to make sure you’re not spending more than you earn. Mark the due dates of all your bills on your calendar, so there are no surprises when they arrive in the letterbox. Start a ‘rainy day’ fund, so you have some money set aside for unexpected expenses.
2. Start planning for Christmas
Many budgets come unstuck because people fail to plan ahead for one of the most expensive times of the year — Christmas. Work out how much you expect to spend on gifts and food, and put aside a little money each month. If you’re planning to take a holiday at the end of year, start saving for it now, so you don’t have to put it on the credit card. Aim to pre-pay your accommodation before you go.
3. Be a ‘debt-buster’
Debt won’t just miraculously disappear — you need to have a strategy for paying it off. Get rid of ‘bad’ debt like credit cards first, as they usually have the highest interest rates. If you have several maxed-out credit cards, consider rolling all of the debt into one low interest card to save on interest and annual fees. Once bad debts are under control, you can then target other debts such as your car and home loan.
4. Get super smart
From this July, the Federal Government’s Super Guarantee has increased from 9 per cent to 9.25 per cent, however it is still a good idea to top up your super by salary sacrificing. According to recent statistics, the average super balance for women is just $33,804 and $49,723 for men, which is way below the recommended levels. Depending on how much you can afford, try to put another 2-5 per cent of your income into your super fund. Also if you have multiple super funds, consider consolidating them into a single account to keep fees to a minimum.
5. Protect your family
It’s not something anyone wants to think about, but you need to ask yourself how your family would cope financially if you or your partner were injured in an accident, became too sick to work, or passed away. Insurance doesn’t have to be a big drain on the budget. If cash flow is tight, you can get life insurance and income protection through your superannuation.
6. Set goals
While most of us are pretty good at saving for short-term goals such as our annual holiday, we often forget to put money aside for the future. Make sure you set some medium-term goals such as how much you want to reduce your home loan by over the next five years. Also plan for long-term milestones like saving for the kids’ education and your retirement nest egg. Review your goals at the end of the year to see how you’ve fared.
Dianne Charman is an Authorised Representative of AMP Financial Planning Pty Ltd, ABN 89 051 208 327, AFS Licence No. 232706. Any advice given is general only and has not taken into account your objectives, financial situation or needs. Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, financial situation and needs.
To find your nearest AMP financial planner visit www.amp.com.au/findaplanner.
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