A fresh start for your finances

Does a new year mean a new you? Are you one of those conscientious people who makes a resolution each New Year’s Eve and sticks to it religiously, or does it slide away as the calendar makes its way through January?

Whether you are a resolution type or not, there’s no denying that the top of the calendar is a good place to start checking that your financial goals for the year are on track.

The first step is to identify that you do indeed have financial goals for the year. Do you know what you want from your money this year? Would you like to have finished saving your deposit for a new home, or reached a milestone amount in repaying your current home loan? Maybe you’d like to bump up your savings for a new car or a holiday, put in a pool, or do some renovations.

Whatever your goal, make a note of it and do the sums to work out how much money it will take to achieve.
Next, determine your current financial position. List your debts, your savings, your usual bills, and what you would spend on necessary expenses like transport and groceries. List any amount left over from your salary that you would usually think of as discretionary spending.

This is where things get interesting. Find ways to trim down your expenses list by cutting out things that could be considered a luxury. These could be items from your shopping list every week, gym fees, magazine subscriptions, takeaway coffees, pricey haircuts, and café lunches at work. Consider taking public transport or riding a bike to work to cut out petrol and parking costs, pack your lunch each day, and commit to not making any impulse purchases.

Consider this. Each day, if you spend $4 every morning on coffee, $15 on parking, $8 for lunch, and $3 on an afternoon snack, that’s $30 a day, which is $150 a week, or a whopping $600 a month. Let’s call that $1800 a quarter. In that time you might also get your hair cut and coloured twice, which could stretch to $200 each, and pay gym fees of about $200. We’re up to $2,400 a quarter, or $9,600 a year. If your partner does roughly the same, it adds up to $19,200.

That’s just cutting a few discretionary items to save you almost $20,000 a year. That will put you a lot closer to achieving whatever it is you’re saving for. But there are a couple of things to remember that will make your savings go further.

If you have credit card debt, pay that down as soon as you can because it is expensive debt that will sabotage your savings plan. Once that’s gone, put your extra money into your mortgage offset to minimise the interest you pay on your home loan, or make extra loan repayments to get ahead and keep that interest bill down. It will save you thousands of dollars over the life of your loan.

Happy saving, and best wishes for 2016.

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