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New Year money resolutions

January 11, 2022

As we move into 2022 it’s a good time to sit back and look at how your money is working for you.

Ask yourself some of the questions below:

  1. How have you gone with your finances last year?
  2. How are you doing financially?
  3. Did you achieve the savings/investmnet goals you set out to achieve?
  4. What areas do you need to improve on?

This may not sound so exiting, but asking these questions will give you a better feel about where your finances are at.

Normally people do not revisit and ask the hard questions and then they can lose control of their finances, and it usually ends up in the too hard basket or the ‘I will do it later basket”. As we know the later never comes.

A bit of planning can go along way. Below are some suggestions

Not spending more than you earn

It sounds pretty basic, but a lot of people fall into this trap.

It’s not that they want to spend more, but they still find themselves shocked at the end of the month to discover a whopping great credit card debt. Or they have no real concept of their monthly expenses so even if their discretionary expenditure is moderate their monthly bills are higher than they realise.

A great way to assist here is to prepare a monthly budget or annual budget. We can help you here.

The budget will highlight where your money comes from and where it goes to. Then you have something to compare with what actually happens. We have seen many times that when people complete a budget it shows that there is money left over each month and therefore annually. But, what we then find is that at times the savings do not match what the budget highlighted was the case.

From our experience, having a budget and focusing on the numbers ensures better results.

Prepare for a rainy day

If there’s one thing you can be sure of when it comes to your finances, it’s that there will be surprises.

Life will be going along as per usual and then, bam, the car dies or an unexpected bill comes in.

There’s only one way to stop you from being blindsided by these ‘surprises’ and it’s to treat them as routine.

Factor in a 10 per cent buffer in your earnings to pay for these out-of-the-blue expenses so they are no longer a shock.

Just make sure you don’t dip into that 10 per cent to pay for everyday expenses or splurges.

A great tip – Include this buffer in your budgets.

Stop spending money on things you don’t need

There is absolutely nothing wrong with spending money on the things you love.

But there is something wrong with spending money on things that you don’t love or more importantly things you don’t need.

It’s easy to spend money on eating lunch out every day or that second cup of coffee out of routine rather than enjoyment.

So cut back on anything you don’t love, so you can spend money on what makes you happy.

Tip – small savings in a number of areas can really add up to large amounts of money. Then when you invest that money and add compounding over time that number becomes even greater.

Set an investment strategy

Everyone needs to plan for the future no matter what your risk appetite.

This means spending no more than you earn, of course, but more than that, it also involves looking after your future financial prospects through investments

On top of managing your daily expenses, you need to consider how your placed for retirement.

Do you have a documented Strategic Property Plan in place to help build a solid investment property portfolio and do you have the right finance structures in place to hold on to them for many years to maximise the full capital gains?

Unfortunately we have seen many people fall back on their wage and bury their head in the sand about how they’re placed financially and what the future has in store.

The key – is to bring your money skeletons out of the closet, face the reality of your situation, good or bad, and you’ll be setting yourself up for a happy — and prosperous — 2022.

Planning for the future is essential, as no one develops financial freedom by saving a little each month from their wages.

Book a time for a chat.

Cheers,
John

P.S. Please forward this to friends or family who you feel would get value from this information.

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IFP Advisory is a qualified member of the ASPIRE Advisor Network. ASPIRE is an industry leading network of qualified, experienced and ethical Advisors who provide quality,unbiased investment advice to their clients and assist them in facilitating the acquisition of appropriate assets.