Want to feel more confident about your finances? Take control of your financial future with this eight-step tidy-up.
There’s always a thrill in finding stray coins behind the couch cushions, or a five-dollar note hidden in a pocket – no matter how small the windfall. And yet we often resist taking a good look at our day-to-day finances, despite the potential to yield far greater rewards.
In fact, a financial spring clean is about more than just finding extra cash. It’s a way to take control of your financial future. Here are eight steps that you can take to freshen up your finances, any season of the year.
1. Ditch unneeded subscriptions
With the rise of online subscription services such as Netflix and Spotify, it’s easier than ever to set and forget that you signed up in the first place. If you’re not actually using the service enough to justify the expense, consider cancelling.
Even if you don’t think you’re signed up to any subscription services, take a moment to look through your most recent bank and credit card statements. Many services get you to enter your credit card details to qualify for a ‘free’ trial – then continue to charge your card long after you’ve forgotten about them.
2. Scrutinise your spending habits
While you’re in the bank statement headspace, take a look at how you’ve been spending your money over the past few months. Convenience purchases like taxis and takeaway might seem like small splurges in the moment, but their cumulative cost could be more than you realise.
Sunlight is the best disinfectant, as the saying goes, and you’ll make more informed choices when you’re honest about where your money goes.
3. Set a no-brainer budget
Budgets are like diets. The more restrictive they are, the more likely you’ll break them.
A realistic budget, on the other hand, is empowering. Rather than accounting for every line item, try the 50-30-20 approach: spend 50% of your money on needs, like housing, groceries and bills, 30% on wants, like dining out and entertainment, and 20% on savings. Set up separate bank accounts for each ‘bucket’ and automate your payments to help simplify the process even further.
4. Streamline your super
Now that you’re on a roll, why not look into rolling your super accounts together? Forget the hassle of paperwork; these days it’s a simple online process.
Having multiple super accounts can mean you’re paying multiple sets of fees, which ultimately eat into your retirement savings. Your super is your money, so it pays to care about it.
This is a good time to figure out which super fund you’d like to keep your money with – you might find you’d be better off with an entirely new fund. If you’re shopping around, take a look at Industry SuperFunds. They have low fees, a range of investment options, and profit members, not shareholders.
5. Calculate your retirement savings
Now that your super funds are looking tidier, use a calculator to find out how much money you could have when you retire.
If the figure isn’t as high as you’d like, there are ways to boost your balance. You can salary sacrifice, which is where you arrange to have your employer to make a direct payment into your super account. Or you can make your own direct payments into your super account.
Bonus: both allow you to take advantage of lower tax rates.
6. Plan for your future
Taking control of your financial future isn’t all facts and figures. It’s about working towards your dreams. Ask yourself, what kind of future do you want? Think both short term and long term. Writing down your financial goals is the first step towards making them a reality. Then circle back to step two – scrutinise your spending habits – to ensure you’re making choices that are in line with your goals.
7. Call in the professionals
Seeking the help of a trusted financial professional often yields a great return on investment. Accountants are familiar with all the ins and outs of tax law, so they’re particularly helpful come July 1. A trusted, non-conflicted financial adviser can help you set a financial goal and figure out how to achieve them. Be sure to check their qualifications before you make an appointment.
8. Make it a habit
Blowing the cobwebs off your personal finances shouldn’t just be a once-a-year thing. As with keeping on top of that pile of dishes, the more often you take action, the more in control you’ll be. Set aside some time every quarter to take a thorough look at your finances, and you might start to see your work pay off – quite literally. No more money messes: by exercising these financial habits, you’ll build towards a healthier, cleaner financial future.
This article was first published by The Guardian on 1 May 2019. The information referred to may change from the date of publication and care should be taken when relying on such information.
*The above material, whilst correct at the time of publication may include references or statements which are no longer current.