From soaring inflation and interest rates to $12 iceberg lettuces, money was a hot topic that had us all talking in 2023. So as we look forward to a fresh new year, it’s the perfect time to set healthy habits to whip those finances into shape.
Financial advisor and On Your Own Two Feet author Helen Baker explains how.
WATCH: 5 money tips from a financial coach. Article continues after video.
1. Check your foundations
Firstly, Baker says it’s important to set up a sturdy base that you can build good habits on. This could include:
- Having an emergency fund – set aside easily accessible cash for when unforeseen trouble strikes (natural disasters, redundancy, illness, etc). Keep this separate from any joint accounts, so you have access to money if, for example, your relationship breaks down.
- Drawing up a spending and investment plan – document where your money comes from and goes to, but also outline your financial goals, contingency plans should things change, expected investment returns, and a timeline for when things should be reviewed or investments sold.
- Staying up-to-date with your insurances – ensure you are fully covered, both in terms of the value of goods and types of losses, such as theft, storm, flood, fire or accident. Also evaluate the level of protections over your life, health, disability and income.
- Tracking your superannuation – check regularly to see how it’s performing and whether tweaks are needed. Don’t consolidate without first checking the fee structures of each fund and the various insurances attached to each (which are automatically cancelled when a fund is closed). Also, consider making additional contributions to yours or your spouse’s super (you may be eligible for government co-contributions).
- Getting started on estate planning – ensure your wishes are respected and your loved ones taken care of once you’re gone. It’s particularly important for blended families, divorced and remarried people, and parents of children under 18.
2. Review your spending
Being frugal doesn’t have to mean going without.
“Chances are there are easy savings to be found without resorting to living on baked beans,” Baker says. Here are some common mistakes to avoid.
WATCH: Financially fit females. Article continues after video.
- Avoid late fees and interest – a needless cost. Automate payments and set reminders on your phone to pay bills on time.
- Check your subscriptions. Are you really using all those subscriptions that drain your bank account? Cancel unused ones and think carefully before signing up for new ones.
- Beware of ‘loyalty tax’ – lenders, utilities and insurers typically slug existing customers more than new ones, hoping most people will just keep paying it. Ask your existing provider to do better. If they don’t, go elsewhere.
- Travel light. If you’ve been putting off servicing the car, you could be reducing its fuel efficiency. Remove non-essentials from the boot – extra weight will chew more fuel.
3. Plan next Christmas now
While most of us are still polishing off the last of the Christmas cake, Baker says it’s a good time to start planning for next year’s festivities.
“It may seem silly to be thinking of next Christmas now, but post-Christmas sales see prices slashed for unsold Christmas goodies. So, stock up now for a fraction of the price on things like wrapping paper, tinned foods and puddings, gifts, decorations, and cards,” she explains.
“Or put some clearance gifts away for Mother’s Day or birthdays, etc.
Of course, you’ll need somewhere safe and dry to store them for 12 months. But your future self will love you for removing some of the hassle and cost in advance.”
4. Talk to experts
Whether it’s for your physical or financial health, Baker recommends surrounding yourself with an A-team of experts that you can check in on from time to time. This may include:
- Your accountant – to ensure you’re not overpaying taxes and underclaiming legitimate deductions/benefits.
- A financial adviser – to make your money work its hardest.
- Your doctor – for an annual physical and mental health check, and to have any concerns looked at.
- A coach (this could be a life, sport, career, business, fitness, vocal or other coach) – to help you lead your best life and enhance your skills, both in money-making endeavours and activities that make you feel good.
5. Invest in yourself
Lastly, set time aside to look after number one.
“Many women sacrifice things for themselves in a bid to save money for household bills or kids’ activities,” Baker says.
“But investing in yourself can boost rather than drain your bank account over time. Learning new skills or gaining extra qualifications can boost your pay or help you transition to a higher-paying industry.”
She adds, “Reading about money from reputable sources will help you manage it better and grow wealth faster. A gym membership or playing sports will keep you in peak physical and mental health – meaning you’re more on the ball and better able to meet the demands of modern-day life.”
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