Take Control of your Financial Life in 2017

Take Control of your Financial Life in 2017

A new year means a fresh start. As we reflect on our health, work and relationships, money often factors into these important elements of our lives. Whether you’ve made a resolution to save more money, pay off your debts or simply have better control of your finances, it’s a good idea to take stock of your income and outgoings at least once a year.
And there’s no better time to do it than the New Year when you’re feeling motivated and hopefully refreshed from the holidays.
Get yourself on the right track by achieving your financial goals to give yourself the best shot of having a happy new year in every area of your life.

1. Gather your bank statements 

If you really want to get a clear picture about how much money you’ve got coming in and going out, it’s best to go through your bank statements for the whole year. Some payments, especially large ones such as home and car insurance, are annual. Although you’re unlikely to forget these in your budgeting, there might be other less obvious payments that only occur on an annual basis. If you’re not checking 12 months of bank statements you might miss them.
Once you’re in the habit of taking stock of your finances annually, you can reduce your bank statement review to six or three months. Just make sure you use your initial documents for reference and be sure to take note of any new or unusual expenses as soon as you purchase them for the following year.

2. Track your spending  

Once you’ve got your bank statements in order, it’s time to start listing your expenses into a spreadsheet. Break them down into categories such as:
  1.  Home - rent or mortgage repayments, rates, fees, repairs, renovations); utilities (water, gas, electricity;
  2.  Food  - groceries, coffee, eating out, alcohol;
  3.  Transport - car repayments, fees, repairs, servicing, fuel, tolls, parking, taxis and/or public transport;
  4.  Insurance - home, car, health;
  5.  Family - childcare, education, activities, lessons;
  6.  Health - doctor’s visits, medicine, yoga, massage;
  7.  Subscriptions and Memberships - Netflix, gym;
  8.  Holidays - flights, accommodation, food, expenses;
  9.  General - clothes, haircuts, books, music, movies, concerts, events, household items, pets;
  10.  Giving - birthday and Christmas presents, donations;
  11.  Debts - credit cards, student loans.
Don’t be afraid to tweak the categories to your own liking. For example, insurance can be a category of its own so you can get an idea of how much you’re paying for peace of mind across all areas of your life (and assess whether perhaps you’re paying too much). Alternatively, you can include insurance in the categories they relate to (eg. home, car, health) for a more a simplified list.
There are examples of budgets online and money budgeting apps, so find one that suits you and get to work.

3. Track your income and savings  

Once you’ve covered your expenses, it’s time to list your income and savings. Be sure to include all income sources such as net wages, bonuses, interest income, investment income, child support and government assistance along with any regular savings.

4. Learn to evaluate your money habits
Seeing everything listed in black and white can be extremely helpful when it comes to working out where you can reduce spending and save money. If you’re worse off than you thought, now is the time to start making some changes.
On the other hand, if things aren’t as bad as they seemed, you can make an informed choice about where to spend your extra cash. Maybe it’s an overseas holiday, a better school for the kids, an emergency fund, extra mortgage repayments, superannuation contributions or an investment opportunity.
Whatever the case may be, you’ll feel empowered and more in control of your life after taking stock of your finances.
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