Making the most of your finances this year
Whether you make them, break them or scoff at the thought of them – many Australians will be making resolutions for the new year, and financial resolutions will be amongst them.
As the calendar switches from one year to another, it’s a great opportunity to give yourself a mid financial year check-up. While it can be easy to give up on that resolution before February comes around, it is possible to achieve your New Year goals.
These are some of the most popular financial New Year’s resolutions and tips to accomplish them:
I will get out of debt
Australians owe more than $38 billion in credit card debt alone. The total amount Australians owe is even larger if you add personal loans, mortgages and student loans to this amount.
If your aim for 2015 is to get out of debt, try to pay more than the minimum requirement each month. This will help you pay off your debts faster in the long run and also result in you handing over less interest to the lender.
If you have multiple debts, identify which debt you need to pay off first. The largest one or the one with the most interest? Government website MoneySmart advises paying off the largest debt owing first so you pay less interest. However, successfully getting rid of the smallest debt first can give you the confidence to tackle the remaining amount owing. The debt which is charging you the highest rate of interest is probably hurting you the most for example credit card debt.
I will save money
If your goal for the next year is to finally save enough money for that new house, car, or holiday, it can be time to start a savings plan.
A high-interest savings account can help you achieve your goal by offering a higher interest rate than an everyday bank account. While it can be convenient to open a high-interest savings account with your current bank, it can pay off to compare savings accounts online to find the one that pays the highest interest.
For example, some accounts with a higher interest rate may also have limits on a minimum deposit each month and your withdrawals. These restrictions can be an incentive to help you achieve your savings goal.
Be sure to check for high introductory rates as well as the default rate after this honeymoon period to choose the best savings account. A savings plan that includes a direct debit can be a good idea if you have difficulty committing to regularly placing money away into your savings.
I will get organised
Organising your finances could make a large difference to your wallet and your peace of mind.
Creating a budget could be a way to help manage your financial commitments. Map out essentials such as mortgage repayments, bills, and travel expenses, then begin to set a limit to other items such as entertainment or eating out.
If you are the type of person who wonders where all their money went from their last paycheck, it could be useful to track your spending before creating a budget. Keep a diary of the money you spend day to day and the means by which you make these purchases.
For example, you may find that you are paying extra for the convenience of making most of your purchases on a high-interest credit card. By switching to a credit card with a lower interest rate, you could be left with more money in your pocket.
I will sort out my tax returns
July is still six months away, yet it doesn't hurt to spend a bit of time getting your tax in order now. If it's been a few years since you've claimed a tax refund then it's a good time to start sorting your paperwork out now.
What expenses have you made in the last six months that can be claimed at tax time? Knocking over six months worth of receipts and expenses will make the final tax check much easier to handle, and will mean you can get your refund quicker than it would take if you just waited until July to go through the finer details.
I will sort out my Super
Have your made any superannuation contributions? The Australian government offers incentives to help you boost your personal super fund by making voluntary contributions. If you’re a low to middle income earner and make personal after-tax contributions to your fund, the government will make a co-contribution up to $500. The co-contribution amount will vary depending on your income. If you haven’t made any contributions, now may be a good time.
Have you got lost super accounts and need to amalgamate them all into one account? You can find lost super accounts using the goverment website, read more here.
You might not be happy with the way your super fund is going, so look at your last few years worth of statements and if you think it could be better managed then research other super funds to find out how you can make better returns from the money in your super account.
A Financial New Year’s resolution can be a great start to a financially successful 2015 and beyond.
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