If you’ve made some lofty plans for your money goals this financial year, you’ll need to make wise financial decisions throughout the next 12-months, to give yourself the best chance of reaching your goals.
Many people want to be wiser with their money – but knowing where to start can be the most difficult part. We’ve put together our Top 10 Financial Planning Tips for the New Financial Year, to help you make better financial decisions.
1. Wait Before You Buy
Impulse buys are tempting. However, if you can wait 24hrs, you’ll be able to make a more informed decision. The sooner you learn the benefits of delayed gratification, the healthier your finances will be.
2. Consistency is Key
Set some healthy finance habits and do what you can to stick to them. Consistency really is your friend, when it comes to making wise financial decisions and reaching your goals. If you get off track, see what you can do to help make it easier to make better decisions next time. Sticking with your plan long term will make a huge difference to your financial situation.
3. Curb Your Credit Habit
If you’re putting everyday expenses like groceries and socks on your credit card – and are unable to pay your credit bill at the end of each month, it’s possible that you’ll still be paying for these items in ten years. While credit cards are convenient and can be a great way to build a good credit rating, it’s vital that the balance is returned to zero, every single month. Set yourself up to make wise financial decisions by always keep track of your cards and limit the amount you carry with you.
4. Remember Your Debit Card
Credit Cards may seem convenient but if not used correctly, they’re a real threat to your financial health. Debit cards are just as handy and take money directly from your bank account, interest free. The rule of thumb here, is that it’s always better to save up before making a purchase. As Thomas Jefferson said, “Never spend your money before you have earned it.”
5. Create a Budget and Spending Plan
One of the most important financial planning tips we can give you is to create a budget. Understanding your income and expenses is paramount to making wise financial decisions. People who have a good understanding of their cash flow make better financial decisions and are more likely to achieve their financial goals. It’s vital that your expenses aren’t exceeding your income. A budget will help you keep an eye on this. Review your income, expenses and debts. Analyse how much (if any) money is left over. You may need to make some spending changes here, to get your budget to where it needs to be, so you can move toward your financial goals.
6. Start With Three Small Changes
It’s amazing how much a daily coffee can cost. Small, manageable, regular changes can make a huge difference to your financial health. Choose three small, manageable changes you can make today, to decrease spending. Track your savings over next four weeks to see just how much difference a few dollars can make!
7. Incoming v Outgoing
Always be sure to spend less than you earn. By keeping track of all your expenses, you’ll always know where your money is going. There are many financial budgeting apps which can help you make wise financial decisions, every day. Once you’re in the habit of spending less than you earn, you’ll be able to start saving, and moving toward your financial goals.
8. Prepare for the Future
Do you know how much money you’ll need to retire? It may seem like a lifetime away, but retirement is on its way! Consider putting away 10-11% of your regular income (Australians receive 9.5% superannuation each pay slip). Calculate your retirement age and take a look at your super balance to see if you’re on track to retire with enough money to enjoy the lifestyle you dream of.
9. Don’t Follow Herd Mentality
It’s easy to fall prey to FOMO (Fear Of Missing Out) which can cause us to make unwise financial decisions that we may later regret. It’s important to analyse all possible outcomes, both positive and negative and then make an informed, wise financial decision before making a large purchase.
10. Automate All Your Finances
It’s much easier to make wise financial decisions with an automatic money management system in place, helping us stick to our plans and avoid mistakes. Automation takes away the need for being self-disciplined and enables wise financial decisions to happen by default. Make use of your bank’s automated payment and account transfer tools to begin automating your finances.
For more financial planning tips or for retirement advice, call us on (03) 8782 3745 or book your discovery call today!
