What are your financial resolutions for 2019?
It’s early January – the festive season and New Year’s celebrations are done and dusted. Now is the time of year we’ve all fielded the age-old question: “What are your New Years’ Resolutions?”
For some it may be losing weight, getting a better job, hitting a personal milestone or climbing Mt Everest; but we could all set some resolutions around our personal finances. Whether you want to get out of debt, budget your money better or save for a house, here are a few financial resolutions to think about for 2019.
Debt Reduction or Elimination
Particularly after the big spend of the Christmas period, a lot of people find themselves in debt come January. For some, this may be compounding the stress of existing debt and making their own financial outlook for the New Year look pretty bleak. Paying off credit card debt and reducing your reliance on loans can not only make your long-term bank balance look healthier, it often alleviates a huge amount of stress associated with growing debt. Knocking off higher-interest loans or looking into debt consolidation are a few ways that those in debt can manage their repayments, as is the “snowball method”
The snowball method involves taking care of your outstanding debt in order of repayment size; with the smallest first. Settling the smaller debts feels like a win, and often gives people the motivation to keep going and pay off the next one. While there is certainly not a one-size-fits-all strategy for reducing debt, particularly bad debt, exploring which option works for you may bring you greater financial freedom in the long run.
Often times, the reason some people get into debt in the first place is poor budgeting, or no budgeting at all. The “spend more than you earn” cycle can see many running up credit card debt, taking out personal loans and denting their credit for years to come. Using a personal budget planner like the spreadsheet found here or the interactive calculator here is a great way to visualise the difference between what you’re earning and what you’re spending. From there you can determine where you might better spend your money, cut back on unnecessary costs and even prioritise which loans you repay first. The visual nature of having all of those figures mapped out and a plan on how to spend your money over a year can help you maintain focus on your financial goals and ensure your bank balance remains healthy.
Saving for a house
Whether it be to live in or to invest, a common financial goal for people is to save up for a deposit on a home. Combining the last two resolutions of paying down debt and budgeting your money appropriately, putting aside a house fund need not be a burden. Some people choose to salary-sacrifice some extra wages into their superannuation. This can prove an effective strategy if you’re looking to get into the market, where you may be able to purchase an investment property using your super fund. Even setting up a savings account specifically for a deposit on your own house, and putting in a small amount of each pay check, can offer people a way to boost their savings while reducing the temptation to spend it in the meantime.
No matter what your new year’s resolutions may be, make sure you seek professional financial advice before you make any big moves. Contact the Wealth team at McKinley Plowman today on 08 9301 2200 or visit us at www.mckinleyplowman.com.au.
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