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Setting goals

Get set for financial success

14 December 2022

Money & Life team

Money & Life contributors draw on their diverse range of experience to present you with insights and guidance that will help you manage your financial wellbeing, achieve your lifestyle goals and plan for your financial future.

With a new year, now’s the perfect time to say bye-bye to bad habits and get your finances on track. Here are five things you can do to set yourself up for financial success in the new year.

Whether you’ve been naughty or nice all year long, it’s likely that a few bad habits have crept in when it comes to your finances. It’s certainly tempting to splurge on all of those little luxuries you might have missed in the last two years, like dinners, nights out, and oh yes, travel.

But spending up big without a financial plan in place is asking for a new year’s hangover. So before you go ahead and enjoy a summer to remember, take a closer look at your financial health. Here are five things you can do ahead of the new year, to get yourself into Santa’s financial good books.

1. Set goals for the new year

The start of a new year is a great time to revisit your spending and set some goals for the year ahead. With more freedoms available than we’ve had in a long time, you can dream big! Perhaps you’d like to travel, study or even buy a home?

Write down your top goals for the year, and check that your budget will get you there. If you don’t have a budget, now’s the time to create one. Use a spreadsheet or online budget planner to list your income, expenses and savings.

If you already have a budget in place, review your bank statements to see whether you’ve been living within your means this year. Make any changes to your budget – or spending – that are needed. If your savings aren’t looking too merry and bright, look for places where you can cut back on spending and divert those funds towards your savings.

Related: Creating a flexi-budget

2. Pay down debt

The silly season can get the best of us all when it comes to overspending, but it’s important to get on top of debt quickly. If you’ve borrowed money to help cover your costs, make a plan to repay it as soon as possible.

The repayments on consumer debt like credit cards, personal loans and buy-now-pay-later schemes can quickly add up, eating into your cash flow. The sooner you pay off your debts, the sooner you’ll be on your way to a happy new year.

Read more: Smart strategies for paying down debt

3. Plan for the unexpected

If the last 18-months has shown us anything, it’s that the unexpected can happen at any time. But you can set yourself up to weather an unexpected loss of income. There are two aspects to emergency planning:

  • Build an emergency fund with enough cash savings to cover your living expenses for at least three months. Keep your savings in a separate account and don’t touch them unless it’s a genuine emergency.
  • Make sure you have the right insurance cover in place. Research shows that Australians are underinsured, with most having only enough cover to meet 92% per cent of their basic death needs, and just 29 per cent of total and permanent disability (TPD) needs. Insurance is a complex area, so speak to a financial advisor or insurance broker who can consider your needs and recommend the right products and amount of insurance for you.

Read more: How to build an emergency fund

4. Pay yourself

Once living expenses, debt repayments and emergency provisions are taken care of, next in line is you! That’s right, it’s time to pay yourself, in the form of savings and investments. If you’re just starting your savings journey, look for a high-interest account to build your savings in. You can also keep your savings in your mortgage offset account to help reduce the interest you pay on your home loan, just be sure to read the fine print on your loan.

Once you have enough funds saved, you can look at investing for a return, and/or contributing more towards your superannuation.

If your funds are already invested, review your strategy and make sure it still meets your goals. Evaluate how your investments are performing, using benchmarks and your long term plan, and make any changes to your investment portfolio that are needed.

If you’d like advice to help optimise your investment strategy, speak to a financial planning professional.

5. Get your estate in order

Finally, if you don’t have an estate plan in place, make an appointment with a lawyer to get one drawn up. An estate plan includes several legal documents, like your will, binding nominations designating your beneficiaries, and, powers of attorney over your health and affairs.

If you die intestate (without a will) your estate will be distributed according to the legislation in your state or territory. That means it’s up to the relevant authorities to decide what happens to your assets and any dependent minors. Even worse, it can take a long time for your estate to be finalised, creating extra stress for your family at an already difficult time. With an estate plan in place, you can rest easy knowing your affairs will be taken care of in accordance with your wishes.

With just a few simple steps, you can get your finances on track for an enjoyable summer and a happy new year.

If you’d like to spend your holidays sipping drinks poolside without any money worries, a financial plan can get your there. Speak to a Certified Financial Planner® (CFP® professional) about the right strategy for you. You can search for a CFP® using the Find a Planner directory.