How to simplify your finances in one week
When looking to improve how you handle your finances, the list can often be endless. But before you despair at the thought, the key to conquering any challenge is to break it down. Below we detail one step for each day of the week that you can be doing to get your financial life on track.
Sunday: Set goals
Setting goals is a vital part of your financial wellbeing and day one is the day to start thinking about the future. Take some time out of your normal routine and come up with a list of key things that are important to you now and in the future. This will give you direction and something to aim for. It could be as simple as a holiday in two years or as bold as quitting your job and setting up your own business. Once you know where you want to go, you can start breaking down the steps you need to take to make it happen.
Monday: Create a budget
Download a budgeting app. To make it easy for you, look for one that automatically grabs transaction details from your bank account and segments the data depending on spend type, e.g. groceries, transport etc. This will give you an instant view on where all of your money is going so you can assess where you need to make changes to reach your goals and make a budget. Whether you want to build a deposit on a house, pay off debt of save for a new car, your budget is pivotal in making it all happen. Saving $250 per month should be possible for a lot of people – over a 30-year time frame, that’s $90,000 saved.
Tuesday: Examine your balance sheet
Now you have a budget, it’s time to look at your balance sheet. While this sounds like a pretty bland accounting term, it’s really important to take stock of what you have and where it is. You’ll be able to identify what debts you have and what they cost you in interest. You’ll be able to determine what assets you have and assess if they’re working as hard as possible for you. A simple outcome could be making sure that all your available cash is sitting in your offset account or if you have cash savings and credit card debt that you clear the debt off. These are easy adjustments to make, but sometimes you have to see it written down to get clarity. Paying off credit card debt of putting extra money off your loan could save you thousands. If you allocated the money you find in your budget into your home loan, that’s another $100,000 saved in interest on the average Sydney home loan.
Wednesday: Review your super
Superannuation is probably not something that’s going to keep you up at night. However, just a small amount of effort could yield you some pretty big results. If you’re an average income earner, the difference between a fund with fees of 1.2% and a fund that charges 0.2% is around $170,000. That’s money that you’re paying to someone else for no reason at all, a gift to the big banks and superannuation companies. If you’re on double the average income, the fee savings blows out to $340,000. It might take you one hour to do some research and download some forms, or you can get a financial planner to do it for you. Either way, it’s easily sorted in an hour or two.
Thursday: Sort or update your will
Research shows that more than 45% of people don’t have a will. While many people often question if there is any point to having a will, you may not realise that when you add up your savings, superannuation and any assets, it amounts to more than you think. Many people also have a default insurance policy in their super worth several hundred thousand, so it’s easy to see how your estate is worth a reasonable six-figure sum. At its simplest, a will may help your family to easily deal with your assets should you die. As your life progresses, you’ll accumulate both assets as well as more complex relationships and a will could potentially save your family a lot of money, time, stress and even tax. While we always suggest that you get proper legal advice, you can get a simple cost effective will online for a modest price.
Friday: Get insurance in place
It’s the end of the work week and you’re probably thankful that it’s over. But have you thought about what would happen if you were unable to work due to illness? Who is going to pay the bills, rent, mortgage, and groceries? It’s important to protect your most valuable asset – your ability to earn an income – with income protection insurance. You’ll want a fully underwritten policy, so don’t fall for a cheap and nasty product that is instantly approved with no medical checks. You can start the process on the commute home, but they’ll follow up with a phone call with questions next week and maybe even request a blood test. But rest assured that once covered, someone else is will pick up the bills if you get sick.
Saturday: Set your strategy
Congratulations, you’ve made it to the final day! Firstly, look back at the goals you set last Sunday and decide what you need to do to reach them. You should have a much better idea about your finances by now, and should be starting to see how you can make it all work. You’ll also understand if you can do it all yourself or if you’ll need some help. Don’t be afraid to reach out and ask, just make sure you get an experienced and balanced opinion backed up with solid data. If you’re going down the DIY path, set up a check in with yourself to make sure that you stay on track. Don’t leave your future to chance – it often only takes a little bit of work to keep you on track for a better financial future.
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