THE start of a new year is always a good time to start thinking about your goals and habits for the year ahead, including your finances. Make 2023 the year you master your money and develop healthy financial habits that stay with you for life. Here we’ll discuss some common sense (but effective) approaches to help you master your money in 2023 and beyond.
CASHFLOW
Cashflow is the lifeblood of anyone’s financial plan. It is important you get to know your money, understand exactly what is coming in, what is going out and where. If you are not overly disciplined when it comes to managing your cashflow, developing a budget is a holdfast way to understand and take control of your cashflow. A budget will also help you to track your spending and cancel expensive services or subscriptions that are wasteful or unnecessary. Understanding your cashflow is the foundation of a good financial plan.
START SAVING
Once your cashflow is under control you will be able to understand how much you can potentially save. Whether you are saving for your first home, an investment property, a car, a holiday or any other cost, developing a savings plan is a great way to keep you accountable and help you meet your target. Setting up an automatic transfer into your savings account will eliminate the desire to spend unnecessarily. It is important to make sure the amount you are saving is realistic, achievable and sustainable. It is also important to have an emergency fund on top of your savings for unexpected expenses.
INVESTING SURPLUS CASH
If you are in the favourable position of having money left over after your expenses and savings, you might consider investing surplus cash into assets. Investing your money into assets such as shares, property or bonds can potentially reward you with financial growth and/or income over time. Returns from assets provide another means for funding things such as a holiday, children’s education or retirement. When investing your money, it is important that the structure in which you hold your investments is aligned with your goals. Different structures have different trade-offs, for example Superannuation has preservation rules compared to non-superannuation structures. Having the correct structure is equally as important as the investment itself.
REVIEW YOUR DEBT
With interest rates at the highest rate since 2013 it is a good time to shop around or ask for a better rate on your home loan. Additionally, if you have a car loan or personal loan (which generally attract a higher interest rate compared to a mortgage) you might benefit from consolidating these loans into one.
PLAN & SET GOALS
No matter what stage of life you are in, developing a financial plan for the future could potentially be the difference between achieving your financial goals or not, whether that is an early retirement, being debt free, or paying less tax. While we have only touched the surface here, the above strategies are a starting point for mastering your money. The world of personal finance can be confusing and daunting, talking to a professional Adviser at Elevate Wealth will help make sense of it all.
Any general advice in the publication has been prepared without taking into account your objectives, financial situation or needs. Before you act on any general advice in this publication, you should consider whether it is appropriate to your individual circumstances. Please seek personal advice prior to acting on this information.
