The turn of the year is a great time to give yourself a health check and makeover – financially and personally.
First up it’s best – before you go beating yourself up about all the inadequate results or things you should have improved, to take the time and note all the things you DID WELL in 2018 – any success you can congratulate yourself on – as this builds confidence for future actions. So take the time to write that list of the awesome things you have done this last year. Well done!
1. Pay off and reduce all CREDIT card limits
In fact, why not make 2019 the year you file those credit cards away and start to live ONLY on what you actually have by using debit cards with no fees.
2. Start an Emergency Fund
A buffer account is the difference between feeling confident about your financial situation and always feeling a bit desperate as you don’t know how you will cope with any small emergency. In the US, it is estimated that 47% of people cannot pull together $400 to deal with an emergency. While I hope it is better in Australia, I know many struggle with large financial issues like cars breaking down.
Start by allocating either a second offset account against your home loan for this buffer account (so at least it is being useful) or create a new account that you automatically pay into which is out of sight, out of mind. One of my favourite speakers is Lisa Nichols on money – check this out on how she got started.
3. Get rid of any AfterPay/ZipPay
Leave behind any form of credit that detracts from your ability to buy a major asset like a house. While these “get now, pay later” purchases seem really easy and fabulous, they suck you into the “give me now” culture. I have found the most successful people financially are those who learn how to say NO to themselves today while waiting and saving for what they DO want. Make it your New Year’s resolution to only buy what you can afford now so you maximise your chances for success in the future.
4. Check your Superannuation
How many years slide by without you ever really knowing how much you are contributing to super and are you getting any value from those contributions? While it can seem an incredibly complicated area and of no relevance while you are young, after those hugely busy years of growing a family, you can arrive without much superannuation or knowledge when nearing retirement and suddenly find yourself in a desperate state with little time left to make a difference. Get those statements and call the institutions as they are obliged and willing to assist you to understand what YOUR retirement money is doing. Start reading in this area and work out how much will you actually need for retirement and how you can get it.
5. Get a clean CREDIT report and keep it that way
In 2018, financial institutions began reporting to each other if you paid a finance account on time and in full each month. So if you regularly pay your mortgage or any other bills late, your credit score could be badly affected. Go to mycreditfile.com.au and get a copy of your report free – at least once a year. Then make sure there is nothing untoward on it and look at any reporting so you know what lenders are looking at as poor advice in this area can have MAJOR implications for your financial health as the years go by.
6. Pay down any HELP Debt
Previously if you had acquired debt through education, unless you earned over a certain amount, you were not required to pay it back. But now the Government has started charging you interest if you do not make any contribution to your debt and some clients have found HELP debts have crept up, for example, from $15K to owing $20K in a few short years. Contact the ATO – start by logging into MyGov and find out what your debt level is and how much you have to pay so you don’t pay extra interest this next year.
7. Update Your will
Not only may your circumstances have changed during the last year or so, but your finances also and so it is important to protect your final wishes. The New Year is a great opportunity to review your assets and liabilities and sit down with a professional to determine exactly who should get what as more misery is created by people who do not think through what will occur after they have passed. This way you can enjoy the rest of the year without worrying about it.
As always, if I can be of any assistance to you, please call me on 0412 709 200.