The new financial year is upon us – time to dust off your calculators and set your financial goals for the coming year. While monthly budgeting is useful, annual planning can help you see the bigger picture, getting you to both short and long term goals sooner.
Annual expenses are often left out of the monthly budgeting, but still make a significant dent in your finances. What are your five, 10 and 20-year financial goals? Have you thought about retirement? How can you become more organised financially?
Here are 42 resources to get you on track.
First things first – budgeting is your top priority. Budgeting doesn’t have to be hard, it just takes some elbow grease and some dedicated time to get your head around it all. Despite the time and the hurdles to leap, (even if purely psychological) budgeting is really important. Without a budget, it’s almost impossible to figure out how you can pay off your debts or save money for future life stages such as retirement. Here are a few tools you can use to help you get your finances in order for the new financial year:
1. You need a budget
You Need a Budget is your financial superhero. It’s an app, an online platform and a masked crusader against debt all in one. And it’s easy. They promote four simple rules to get your budget on track, and, although You Need a Budget is a subscription-based service, you can try it for free for 34 days.
2. Home budget
Running a household is an expensive undertaking and it’s easy to set yourself on autopilot. Being vigilant with household expenses can help you cut back and save money on everyday items like utilities, groceries and maintenance. Check out this News.com.au article (it’s an oldie but a goodie) for more tips.
Pocketbook is a great app for helping to manage your personal finances and budget. It seamlessly integrates with major Australian banks to give your budget an ongoing health check.
4. Make a plan
Budgeting is hard and saving money for the future is even harder – the present always seems to have so many competing demands. The Barefoot Investor has a fantastic and easy-to-follow strategy: 60-20-20. Read more about it here.
5. Choose the right savings account
Not all savings accounts are the same, some offer high interest, some offer lower fees, some have minimum and maximum balance amounts. MoneySmart recommends comparing bank accounts to figure out which account best works for you and your own financial goals.
6. Set goals
Speaking of goals, setting achievable financial goals is one of the best ways to establish a secure financial future. Consider using the Australian government’s TrackmyGoals app, or one of the many financial goal-tracking apps available for Android and iOS on your smartphone.
7. Increase your financial literacy
Knowledge is power. Many of us don’t know much when it comes to our finances, but a little goes a long way. Check out this quiz from Barefoot Investor to test your money skills and figure out where you need to brush up on your financial basics.
8. Frugality is your friend
Look for ways to shave more money from your budget; websites like Simple Savings offer tips and tricks to curb spending, get out of debt and reach financial goals sooner.
If you’re up for a mortgage renewal this year, you can see what you could save on different rates with our loan repayment calculator.
9. Check your rate
Don’t sit on your laurels; it’s a competitive market so checking your home loan interest rate can ensure you’re getting the best deal. You can compare home lenders at Compare the Market in just a few minutes.
10. Move your loan
If you’re not getting a great rate or you think you can do better, consider moving your loan to another provider. Some fees may apply, but work these into your calculations. Check out the difference between your current interest rate and loans at a lower interest rate using our Compare the Market loan repayment calculator.
11. Pay a little extra
Paying a little extra on each repayment may not seem like much but, over time, it could knock years of your loan.
12. Pay more often
Usually, mortgages are set-up on a monthly payment basis; however interest is calculated more often. If you pay on a fortnightly or weekly basis, you may pay less interest.
13. Add payments
Make extra payments – if you get a tax return, put it on your mortgage, money from grandma – put it on your mortgage. Consider renting out your spare rooms. Every little bit counts.
14. Find a financial planner
Although Google is very helpful, sometimes it’s worth investing in professional advice. Consider getting a Financial Planner to help you set up a plan for the future.
15. Start a share market portfolio
You don’t need to be the Wolf of Wall Street to make money on the stock market. Start small and build a portfolio of low or moderate risk stocks. The ASX offers free tutorials for first-time investors, check them out!
16. Get an investment app
It’s the 21st century, so obviously, ‘there’s an app for that’. Acorn is a fantastic option for fledgling investors – it integrates with your bank account to ‘round-up’ transactions, taking those extra dollars and cents and investing them in a diversified portfolio. You can choose a conservative to aggressive investment strategy and watch your balance (hopefully) grow!
17. Consider property investment
For more risk adverse investors, a brick and mortar property investment may be the key. Check out our article on Rent Ready Investment Properties.
18. Invest in yourself!
You will always be your greatest financial asset. Positive changes to your income will provide the largest, most stable, ongoing increases to your financial health. Take the time to consider your career path; planning for future career moves well in advance will help you set goals for achieving them. You may need to undertake further short or long-term study in order to make your career goals happen but the investment, in both time and fees, will likely be well spent.
If you’re set for a raise in the new financial year, now is the time to figure out how best to use your extra pay.
19. Calculate your salary
Use a salary calculator to figure out how much you’ll have to take home, after tax, out of your new pay packet. This will help you set a new budget for the financial year.
20. Reassess your budget
Make sure you reassess your budget every year to incorporate your new income. This budget planner from MoneySmart will help you keep track of both new income and new expenses.
21. Pay off debts
Although there’s the temptation to splurge when you get a raise, paying off your debts will be a better splurge in the long run. Increase your mortgage repayment a little or pay off your credit card faster.
22. Save more
An increased income is opportunity to put a little more away for a rainy day or retirement. Beef up that investment portfolio or dream holiday fund with the extra cash.
This may seem counterintuitive but life shouldn’t be all work and no play. It’s ok to splurge once in a while. If you’ve just gotten a raise, budget for a treat – whether it’s a holiday, new shoes, a footy trip with the boys or a nice dinner, a little indulgence goes a long way. Treating yourself will remind you what you’re saving for and help reinvigorate you for the new fiscally savvy year ahead.
Saving for retirement can seem like a distant concern for many but your working years will pass by in a flash and you’ll need to set yourself up for the golden years. Superannuation is one way to help build your nest egg for retirement, but many of us don’t understand much about super, or ways to maximise this investment for the future.
24. Educate yourself
How much do you know about your superannuation? Do you know how much you’ll have when you get to retirement age? Take this quiz to find out what you do and don’t know about your future retirement needs.
25. Super health check
Don’t just throw away or quickly file those superannuation investment updates or year-end reports. Make sure you read them. Are your contact details correct (if not update them – perhaps you’ve changed your name or beneficiary)? What do you returns look like? How much are you being charged in fees? If you have multiple superannuation funds and moderately low balances, it’s a great idea to consolidate them into one fund, as it will reduce the amount you pay in fees. Check out this article for more tips on how to give your super a quick check-up.
26. Find the right fund
Not all funds are created equal. Make sure you compare funds to figure out which one suits your industry, income and investment needs. According to SmartCompany, having more than one super fund can work to your advantage, but you need to have a high superfund balance to avoid losing on the extra fees. They recommend choosing ‘the best of the best’ for each category – diversified portfolio, low fees, and insurance and flexible investment options.
27. Take on risk
There’s an old saying ‘no reward without risk’ and although that’s not necessarily true, it’s often sound advice. Most superfunds offer investment strategies ranging from ‘conservative’ to ‘aggressive’; aggressive strategies carry higher risk but often reward with higher returns. Considering a higher risk investment option for your super could result in a higher balance at retirement.
28. Make concessional contributions
Don’t leave it up to your employer contributions to secure your retirement income. Making concessional contributions not only adds to your nest egg in your golden years, it’s also a great tax break. They explain it well over at Superguide, so have a read. (Note: if you make a high income and reach your concessional contribution cap, you can also make non-concessional contributions up to $180,000 a year to superannuation.)
29. Be prepared
Knowing how much you’re paying in tax will help you establish your yearly budget. If you’re self-employed, it’s smart to figure out what your approximate tax bill will be so that you can save that money (in a separate bank account, if need be) as you go. Try using our Compare the Market income tax calculator to get a rough estimate..
30. Research potential deductions
Do you know what you can claim? Tax deductions are tricky business and many of us miss out on potential deductions because we just don’t know what we’re entitled to. Things like membership fees, home office expenses, uniforms and even home Internet and mobile phone charges may be claimable for business use.
31. Keep track
Do you have piles of receipts in a shoebox somewhere, ready to decipher or hand over to your accountant come tax time? Take out the trash and keep track of your receipts electronically with apps like Receiptbank. Receiptbank is ideal for sole traders and small businesses; just take a photo or scan of your receipts and invoices and upload to the software to read and categorise. It integrates with XERO as well, helping you keep track of your personal expenses with ease.
32. Get an accountant
Getting a professional to file your taxes for you will help you to make sure you don’t miss out on any potential deductions. And, your accountant’s fees are tax deductible on next years’ tax return!
Whether it’s a pile of bills, credit card statements or personal loans, facing up to your debts can be a confronting task, but these five steps could help you get that debt under control.
33. Be smart
Don’t go into debt if you don’t have to – save for that dream holiday, mortgage down payment or new pair of designer kicks. However, sometimes you can maximise your credit card spending for rewards and cash back. Pointhacks is a great resource for anyone looking for ways to use their credit cards to accumulate frequent flyer points and other loyalty rewards.
34. Spend wisely
There are some things you should never use your credit card for, like paying off your mortgage (think about how much extra interest you are paying – yikes!) or your tax bill (the ATO offer repayment plans, so why make things more complicated). Things like weddings or holidays can also prove really costly if you put them on plastic and can’t pay the balance off quickly.
35. Avoid credit card cash withdrawals
Cash withdrawals on your credit card come with a hefty interest rate. You’ll pay through the nose to access cash this way, so avoid it if you can. You’ll find a few better ways to use your credit card that don’t involve cash withdrawals here.
36. Manage your debt
Keep careful records in order to manage your debts. Whether it’s a simple spreadsheet or an online accounting system, monitoring and recording the money you owe to various debtors will help you stay on top of your repayments and avoid any unnecessary penalties, late fees or extra interest charges. There are plenty of great debt tracking apps available for iOS and Android, like Debt Free or Debt Snowball Pro.
Prioritise your spending and repayments. A little planning goes a long way, so stick to the budget you developed. However, most of us don’t start off with a ‘clean slate’ – we’ve got credit cards, car loans, mortgages and outstanding bills. It’s really important to prioritise paying down debts before other spending to avoid getting trapped in a debt spiral. Below are five tips to help you tackle your outstanding debts:
37. Pay utilities and other small bills
Pay your utilities on time; if you’ve budgeted for them properly, you should have the money available to pay them when you need to. Sometimes this doesn’t happen though, so always contact your utility providers immediately if you can’t pay by the deadline. They will put a payment plan in place to help you get back on track. The same goes for things like parking tickets and other fines – pay them off as quickly as possible to avoid late payment fees.
38. Attack credit cards
Once your smaller debts are under control it can be smart thinking to start attacking your credit cards. Even paying a few extra dollars a week will make a difference over the long term.
39. Personal loans
Next, start paying down those personal loans. Every little bit counts; so if you can forgo a coffee or two a week, your debt balance will thank you.
Once your other debts are cleared, start swinging that extra money onto your home loan. You’ll be amazed to see how quickly your mortgage debt starts dropping. Check out this great mortgage debt calculator from Australia’s own Dr Karl to see how quickly extra repayments can reduce your mortgage debt.
41. Car loans
Don’t stress too much about your car loan if it’s a fixed sum interest loan. Most cars are financed this way, which means that no matter how quickly you pay off your car loan, you’ll still pay the same amount of interest (and sometimes there are even early repayment fees!).
If you’re struggling with your finances, our final piece of advice would be to tackle issues in small chunks so as not be become too overwhelmed. Getting finances in order often isn’t fun, but should eventually lead to you being in control of your money, and ultimately a comfortable retirement.