The beginning of a new year is an excellent opportunity to re-evaluate your financial situation and make some changes that can improve your money management. According to recent research by US company Business Wire, 94 per cent of millennials made financial resolutions in January 2019. According to ASIC’s Money Smart, the top three savings goals for people in Australia are saving for a holiday, saving towards a rainy day fund or to buy/renovate a home, in that order. Other money goals include building wealth for retirement, paying off debt and investing. Whatever your goal is, there’s a simple solution to achieving it: becoming more money conscious.
1. Know where your money goes
The first step in understanding your financial situation, where your money goes and how your habits are affecting your financial goals, is to start tracking your spending. There are heaps of digital apps out there that can be linked to your bank account to track your spending, or you can go old school and keep a excel spreadsheet on your computer at home. Tracking your spending will show you where there’s room for improvement, and how much money is being spent on unnecessary things.
2. Work towards achieving small goals
Setting yourself a huge goal like saving $10,000 in 12 months can feel unattainable, making you less likely to adhere to a strict budget. Instead, set small goals, such as going a whole week without buying coffee, or bring your lunch to work for a whole week, or walking to work one day a week to save on train, bus or taxi fares. These goals can be achieved within a week, can help you break bad habits, and you can add to them each week. All the while you are reducing your expenditure.
3. Know when to use a debit or a credit card
One in six Australians are struggling with credit card debt, and so many of us have credit cards. However, credit cards shouldn’t be used all the time, despite the rewards or points your bank might be spruiking. Try to only use your debit card so you only ever spend the money you have. This will encourage you to stick to your budget. Only use credit cards for emergencies or when booking things such as flights or hotels that require credit card details for reservations and pre-authorisations.
4. Comparison is the thief of joy
It’s so important not to compare your lifestyle, budget or goals to that of friends and family. Just because people in your immediate circle are sporting the latest phone, bag or fashion doesn’t mean you have to as well. Stay focuses on what you want to achieve and why, and know that even if you’re feeling a little left out you are working towards achieving something bigger for yourself.
5. Use cash
Money can seem like nothing more than numbers on a screen. If you’re trying to be more aware of where your money is going try taking out a lump sum of cash for your ‘spending money’ at the beginning of your pay cycle. Knowing you can withdraw more and actually having to hand over cash will make your more conscious of where and how many is being spent.
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All the advice in this story is general in nature and has not taken into account your objectives, financial situation or needs. Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, financial situation and needs.