At the start of a new year many of us make a number of resolutions that we wish to integrate into our lives.
According to Mortgage Choice CEO John Flavell, these resolutions can often include a commitment to eat better, exercise more or be better with our finances.
“Whether you’re aiming to become a better saver, or you’re wanting to save for a home deposit, the key is to not let your resolution fall flat,” Mr Flavell said.
The Mortgage Choice boss has a few tips to ensure any financial resolutions become a reality.
1. Set a goal
According to Mr Flavell, the key to saving more money is setting a financial goal that is specific and realistic.
“You can have a large goal in mind, such as buying a home, but you should also break it up into smaller goals that will be easier to achieve,” he said.
“If your goal is to save more money, give yourself a dollar figure and a target date to achieve that by, as this will keep you accountable. Savings calculators are helpful tools that can assist you in working out how much you can save a month and how long it will take for you to reach your savings goal.”
“You should review your goals at least once every six months to track how you’re doing. If you find that you are not making much progress, rather than giving up, make changes so that you can achieve your goals.”
2. Set up a budget
Mr Flavell said a budget was an essential factor in achieving any financial goal.
“By creating a budget, you will have full control of your finances as you will know how much you are spending and saving,” he said.
“Tracking where your money is going also allows you to make clear decisions about your purchases, see what expenses you can potentially cut back on, and plan your spending ahead of time.”
Mr Flavell said a budget did not have to be too complicated.
“It can be a simple document such as a spreadsheet, where you note down your income and all your expenses for the month,” he said.
“The trick is to review and update it regularly to make sure it always aligns with your current financial or personal situation.”
3. Review your spending
“You can boost your savings significantly by cutting back on certain expenses, or finding more affordable options,” Mr Flavell said.
“Look at your current contracts – like gym memberships and/or your phone contract and see if there are easy ways for you to reduce the amount you spend each month. Call your gym up and ask for a discount, or research your phone provider options online and see if there is a cheaper supplier on the market.
“While you may only save a few dollars here and there, not only does every cent count, but every cent takes you one step closer to your end financial goal.”
4. Reduce debt
Another great way to reach your financial goal faster is to pay down your existing debt.
“The Christmas period is an expensive time of the year, so you have probably racked up debts on your credit card,” Mr Flavell said.
“When you get your credit card bill, aim to pay these off completely or minimise them as soon as possible. You should also try and pay more than the minimum amount, which is typically 2 per cent of your closing balance, to avoid paying additional interest.
“When you pay off your debts, you free up your cash flow. This means you have more money in your back pocket each month that you can put towards your financial goals.”
5. Shop around for better deals
Now that you know how much you’re saving and how to potentially increase your cash flow, the next step is working out the best place to put your money.
“If you want your money to work as hard as possible for you, you need to ensure you are saving it in the right location,” Mr Flavell said.
“Get online and research the various options provided by Australia’s lenders. By doing your research, you will see what term deposit facilities or savings accounts will offer you the greatest return on your dollar.
“Before making any final decisions however, speak with your bank or your local broker to ensure it is the right financial move for you and your end goals.”
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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