Most Australia’s start the new year with a list of new years resolutions and changes that they intend to make so that their life is more fulfilling and organised. By the time February starts most people have already failed to stick to their resolutions.
Some of the most important things a person should focus on, especially in the new year are personal finance, saving, and investing.
Achieving financial independence is a common goal for most people to have, but very few people know where to start. If you’re starting to take steps towards financial freedom this year, here are seven tips you should follow to set financial goals for the new year.
Put Your Savings on Autopilot
If you are currently saving for something special such as a first home, it would be a great idea to make saving not spending your top priority.
An easy way to make sure you keep adding to your savings is to set up an automatic transfer from your everyday bank account to your savings account on every pay day.
Set a realistic amount so that way you won’t be left desperate for cash in the middle of each pay cycle. The money you have left can be spent however you wish. However, don’t use any of the money in your savings account.
Prevent Impulsive Buying
Retailers are very skilled at enticing customers to make impulsive purchases with end-of-aisle products, two for the price of one deals and other add on specials. Online you are likely to see adverts for items you have purchased previously, wherever you go online. Marketers and merchandisers make it very easy to fall into bad habits and get caught up in a cycle of making impulsive purchases that are hard to stop. To save money efficiently, you need to try your best to commit to no longer making anymore impulsive purchases. Here are a few changes and tips that can help:
When you go out, leave your credit card at home. This reduces the temptation to make sudden purchase and it gives you some “cooling off time” to think more carefully about whether you really need to buy a product.
Before you go shopping, first write a list of what you need to buy and don’t buy anything that’s not on that list. It would also be wise to give yourself a ‘play money’ limit. A limit for all non-essential purchases or expenses. It doesn’t need to mean you can’t do fun stuff that you like, all it simply means is that fun spending is not a daily random habit and it must have limits.
Don’t visit a shopping centre unless you really need to. This can really cut down impulse spending and after a couple weeks, you might not even notice the lifestyle change. It would also be wise to eat a meal at home before you go to the supermarket. When you are shopping for food, a full tummy means much less temptation to buy extra treats.
Adopt a 50:30:20 method
This method is when you divide your take-home pay into three set portions. The first part is you spend 50 percent of your pay on living costs, 30 percent for fun things such as dining out or entertainment and leisure. The final 20 percent can be invested into your savings account.
These portions don’t have to be set in stone. You can play around with different percentages until you find what works for you. Think about setting up separate accounts and dividing your money between the three portions. It can make it easier to stick with your chosen spending portions.
Track Your Progress with A Budgeting App
There is a large number of different apps available to help you stay on track with your saving and spending goals. Some of the most common include; Mvelopes which is an app that allows you to allocate set amounts to regular expenses. Pocketmoney, is another app which syncs with your bank accounts, loans and credit cards,
If adopting a digital approach to money management works for you, these apps can play a huge rule in enabling you to grow your savings.
On the other end of the financial spectrum, there are plenty of apps that encourage people to spend more. From buy-now-pay-later apps to food delivery services, the common thread is that they make it harder for a person to stay faithful to a budget.
It is super important to skip the app trap by deleting spending apps from your phone or at least until you have started to achieve off some savings goals.