Overspent this year?
Here are 8 ways to kick 2018 off on the right foot and get your finances on track. .
A budget is the most valuable tool for managing your finances. A good place to start is the Pocketbook app or by using the moneysmart budget planner.
List your total income from any earnings, allowances and investments. Then, add in all your weekly , monthly and annual expenses, including the costs to repay any
debts like credit cards or your home loan. That way you'll know exactly how much you have left over each week or month for extra luxuries - or where you may need to tighten the belt.
Clearing your debts is easier said then done. Despite this, don't stop chipping away at it. The longer the debts stay with you the more you will spend on interest. Your Financial Adviser can can help you set a realistic repayment plan and help develop a strategy to make debt management easier. For example if you're surrounded by credit card bills, you might be able to consolidate your debts on a single card with a lower interest rate that what you are currently paying. Or if you feel like you're not making any progress paying off your home loan you might be able to switch to another provider who's offering a more competitive rate.
If you find yourself living from payday to payday, it might be time to look at your income and outgoings to see if there's a way to smooth out your cash flow. This will look something different for everyone and a good place to start is by downloading the pocketbook app. You might find opportunities to boost your income, either by working extra hours in your current job, doing some extra work on the side or finding a new role that pays more. If none of these options are a possibility , it might be a case of revisiting your budget to see if there are any lifestyle changes you could make.
Once you've got your cash flow and debts sorted, it's easier to create a realistic savings plan and stick to it. Saving can become even easier if you open a high-interest savings account and by setting up a direct debit, you can automatically deposit a fixed amount from your everyday account as soon as your get paid. This will give your savings a better chance of growing without you having to put in the hard yards. If you are saving for something specific, like a holiday or new car you should also check the Moneysmart Savings Goals Calculator. You can input the amount you need to save, the time frame and the interest rate your savings account earns your can work out how much you'll need to out aside each week to reach your goal.
FIX YOUR CREDIT SCORE
It takes time, but improving your credit score is well worth it. Give yourself a headstart and find your credit score in under 60 seconds on creditscore.com.au. It's a free tool and the interactive dashboard allows you to understand what is driving your score and how to improve it.
FOCUS ON THE FUTURE
By getting your finances under control, you'll be in a better position to start thinking about your long term investment strategy. Depending on your situation, you might prefer to focus on either your super or non-super investments or a mixture of both.
Provided it is right for your circumstances, one way to grow your super faster is through salary sacrificing. Even a small amount each week or fortnight can have a big impact by the time you retire. Alternatively, you might want to look at investing outside super. On one had the tax treatment of your investments may not be favorable as it is in the super environment, but on the other hand, you can access your capital and earnings more readily, without having to wait until you reach retirement age.
GENERATE PASSIVE INCOME
Passive income is income on the side of your daily hussle. With the rising cost of living people are turning to alternatives to generate a passive income.
You can earn passive income by signing up to Airtasker, do some freelance writing or web design, sell goods on eBay and Gumtree or spend a few hours a week driving a uber, baby sitting or tutoring.
ASK FOR THAT PAY RISE
The best time to ask for a pay rise is right now. The reasoning is that companies are finalising their budgets and if they year has been a good year for your company, then your chances of success couldn't be better.
This document contains general advice. It does not take account of your objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision.