The beauty of the end of financial year falling in the middle of the calendar year is that many get a second chance, or a new chance, to complete those ‘financial goals’ that may have fallen out of focus over the past year.
This might be short term, like a holiday, or long term, like saving for a new house. One of the quickest and easiest ways of achieving this is by conducting a self-audit by reviewing your current financial situation. This way, you can evaluate your position and realign your financial structure to ensure you are right on track to achieve your goals.
Where do you begin?
Start out by giving yourself a clear savings goal. What do you want to achieve this year, what do you want to achieve in five to 10 years’ time, where do you want to be in retirement?
Be open and honest in your assessment short term, and ambitious in your goals for the future. This will go a long way in allowing you to make the changes you need over the next few months, and enable you to set up a strategy for the long term.
Refining your budget can go a long way
We often suggest to our clients to start the new financial year by taking a look at their budget. Typically, a budget done correctly should give you transparency and visibility across all of your incomings and outgoings, allowing you to stay on top of your expenses (like bills, loan repayments etc.) and enable you to achieve your short and long term goals.
Setting a budget is a good habit to get into from an early age, to ensure you develop the necessary skills to keep the course and stay on track.
ASIC has a fantastic budget calculator for those of you looking to make a quick start on the financial year and address some of those obvious issues.
For those of you looking to make a more serious adjustment and re-align the way you budget and save in the future, a financial planner can provide you with the necessary advice you need to achieve your financial goals.
Find a way to reduce your spending… no matter how small it may be
We would all like to reduce our spending but what is the most effective way to do it? A strong budget will enable you to identify the areas in which you are over spending, and allow you to make any necessary adjustments to get you back on track.
“But sometimes a budget can overlook the finer detail.”
A great solution for this is a ‘spending diary’. You can start for a week, and then complete a full month. Write down all your expenses, like that morning coffee you have on the way to work, or the next jacket you need to have for winter, and compile them into a list. Remove the ‘one-offs’ or outliers and determine a roughly monthly expense guide to benchmark against in the future. This requires commitment but provides great insights into your spending patterns.
It all adds up, and while it’s important to keep doing the things you enjoy, knowing exactly what you are spending your money on can go a long way to ensure you keep progressing towards your goals.
Establishing and maintaining that rainy day account
It’s often underestimated and overlooked, but a rainy day account is critical to any situation. What if during the next six months the family fridge needs replacing, the car blows its engine and a sporting accident keeps you out of work?
A budget allows you to save for those special occasions or unexpected incidents that can stretch you to your financial limit.
Talk to a specialist for advice
If it all feels a little bit too hard, or confusing, our advisers would be happy to go through your individual situation and help tailor a plan that suits you, for the ‘now’ and the future. Simply contact your local adviser today for a friendly discussion relating to your financial position.