We are a month out from Christmas and while it can be a joyful time of the year, for many it puts as much pressure on their finances as their waistline. It’s not surprising that when New Year’s Day arrives a week later many of the resolutions that are made can relate directly to the previous month’s excesses.
"This year I'm going to lose weight, drink less and eat healthily"
"This year I’m going to… start saving… stick to a budget… pay off my credit card… start investing for my retirement"
The benefit of the holidays is it gives us some time away from work to relax and focus on ourselves and our families. For anyone that is likely to make financial new year’s resolutions here are a few tips you can use to get a head start before the festive season takes it's toll.
Tip 1: Complete a financial health check
Just like having a regular checkup at the doctor a financial health check is a quick and simple overview of your current financial position. It identifies those areas that you are doing well as well as any areas that deserve more attention. See here for a simple financial health check.
Tip 2: Review your credit report
You can obtain your credit report for free once per year. Your credit report will be viewed whenever you apply for any form of credit like a home loan, credit card or even a mobile phone contract. As this can have a big impact on whether you will be offered a loan it is worthwhile reviewing it to ensure that it is correct. It is possible that the credit reporting agencies or creditors have made mistakes and this has the ability to impact you. Your credit report can be obtained here
Tip 3: Search for lost super
Super Seeker is a tool offered by the ATO to find any lost super where your tax file number has been provided. If you have multiple funds determine if it would be beneficial to consolidate them.
Tip 4: Search for unclaimed money
There is around $1.2 billion in lost shares, bank accounts and life insurance. ASIC can help you track down any of this here.
Tip 5: Review your annual expenditure
A budget shouldn't take much more than 15 minutes to prepare and with online banking it is often very easy to find exact expenses very quickly. I have a budget spreadsheet available here
Tip 6: Review/establish a cash reserve
The primary goal of the majority of my clients is to be financially secure. The first step in achieving this is being capable of meeting any unexpected expenses and maintaining a cash reserve to do this. While you don't want to hold too much of your assets in cash offering a negligible return, not having enough can cost you more should you need to sell assets at a bad price or rely on credit. Everyone's lifestyle is different and so the possible expenses vary greatly, generally 3 months of your cost of living as determined in the budget previously should be a good buffer. The budget you have completed should also give you an annual surplus to determine how quickly you should be able to accumulate the cash reserve.
Tip 7: Use Christmas as an opportunity to teach financial literacy to your children
If your children are going to be receiving money as a present then it is a good opportunity to run through some simple financial planning with them:
Have them research all the things they would like to buy.
Help them to prioritise so that they get what is most important to them which reinforces some sacrifice needs to be made.
Discuss investment as an alternative to their present list and how they would be able to buy more in the future if they invested the money they received. Moneysmart have a simple calculator to show the benefits of compound interest.
Tip 8: Seek financial advice
Just as using a Personal Trainer can improve your physical results a Financial Adviser will work with you to make the most from your current financial position. At Hart Wealth Management we offer complimentary initial meetings so if you would like to see what we can do for you or you have family and friends that would benefit from meeting with a Financial Adviser we'd be more than happy to arrange a meeting.
It is important to note that this information is intended to be general in nature and it has not taken into account your current financial position, needs or objectives. It is important to seek specific personal advice that is suitable for your individual circumstances and which addresses your goals and financial position.