As we get ready to welcome the new year, it’s a good time to get financially fit.
Take a look at your personal finances and see where you can elevate your financial health, and how you can make your money work for you.
If you run a business you might want to assess your finances and see how you can scale up next year.
Whatever your situation, make 2022 the year you get on top of your personal or business finances.
Here are 11 financial resolutions for 2022 to help you start your new year right.
Financial new year tips for 2022
1.Budget, budget, budget
Your entire year’s financial success likely rests on having a decent budget, one important financial resolution for 2022 should be putting together a financial plan. Part of this process is doing a financial analysis of your income, expenses, and investments. If you are discouraged by the idea of being buried in data, you can always contact your financial adviser and seek their assistance.
There are plenty of personal finance websites and apps that can help with budgeting, like Moneysmart. Alternatively, you can go old school with a pad of paper and pen. You can’t argue with a resolution like budgeting.
2.Save something every month
One thing that should definitely go in your budget is how much you plan to put away in an emergency fund or savings account – or both.
Another resolution should be saving every month regardless of the amount.
If you're struggling with how to save money, you can always try to set aside spare change on each debit card or account into a separate savings account. You will be surprised how quickly all that spare change can add up.
Superannuation is like any long-distance journey; you want to make sure you know where you are headed and how to reach it. That includes finding a vehicle that’s fit for purpose. Otherwise, you could end up short of funds to enjoy your destination – in this case, retirement.
Think about what was the last time you spoke to your financial adviser about your superannuation? It should be on everyone’s annual to-do list to check how your superfund performed against their peers, and whether you have maximized your concessional contribution limits.
4.Evaluate your eating-out budget
It is not unusual for a couple to eat out three to four times a week when both are working. Whether this is takeout or dining in, this could easily add up to $200 to $300 a week or more.
It’s even worse for your budget, if you have kids and are eating or ordering out three to four times a week. If the ‘eating out’ budget was cut in half to $100 to $150 a week, and you placed the money in a savings account at the bank, or even in a savings jar at home, by the end of 2022 you will have saved $5,200 to $7,800 a year for other needs, goals, or dreams.
For those that are time poor and cannot be bothered to plan/ shop for ingredients, the meal planning services can significantly cut down the time commitments and introduce more varieties to the dinner table at a reasonable cost.
5.Maximise credit card rewards
This is a fun financial resolution for credit card holders, maximise your credit card cashback or points rewards.
Hopefully, you already pay off any credit card debt monthly and pay no interest charges, if that’s the case, it may not be a bad idea to apply for a new rewards credit card if you do not have a good one already.
There are numerous reward credit cards offering generous enrolment bonuses, such as 100,000 Qantas Frequent Flyer points for spending $3,000 during the first three months.
The bonuses are sometimes valued at $1,000 or more, and the $3,000 threshold needed to earn the bonus is easily achieved with purchases you may already have to make such as vehicle insurance or registration fees.
6.Review your subscriptions
Take a look at every service you subscribe to and see if there are any you could eliminate.
It happens all the time – you sign up for a free 30-day trial and forget to cancel when the trial ends. You tell yourself you’ll cancel the subscription before the next automatic deduction and life happens and you forget yet again.
These days, it isn’t only entertainment streaming subscriptions to keep track of, but others from magazines to meal plans.
You will be surprised how much money you have been paying for things that you no longer need.
7.Pay down debt
Especially if you’re in your 30s or older with a large amount of debt, coming up with a plan to reduce what you owe is really important, even if you have to make some financial sacrifices to do it. Debts are not created equal; you should make it a priority to pay down those ones that attract higher interest rate like credit card debts or personal loans. You may also want to consider consolidating all your outstanding debt which is a lot easier to manage and track.
Remember, in order to enjoy your financial freedom, it is important that you have control over how much money you owe, no matter what the purpose of the debt is. Even if you cannot reduce your debt to zero in 2022, try to minimise the balance.
8.Analyse your insurance
This may feel like a chore, but it’s a smart financial chore to do. You may want to reconsider your insurance choices at the beginning of each year, especially 2022.
Ask yourself questions like, do you or your family have appropriate private health insurance, and are you paying too much for extras cover for things you never would claim? Did you know if your household combined income is above certain threshold, it is actually cheaper to get private health insurance instead of paying for the additional tax if you don’t?
Aside from evaluating your health insurance choices before the April price hike, take a good look at your house, contents, or car insurance. Have you had those policies from the same insurer forever? Maybe you’re paying too much. You may also want to buy some additional insurance like life, income protection or TPD. These questions may seem far away, but it is always better being prepared.
Alternatively, you can always contact your financial adviser and review your insurance cover.
9.Make a will
Having a will is important, especially if you have a lot of assets. If you don’t have a will. make 2022 the year to have it written. You can get your will written by a solicitor (for a fee) or by a Public Trustee. A Public Trustee may not charge if you are a pensioner or aged over 60, or nominate them to carry out the instructions in your will, i.e. to be your executor.
If you use an online will kit, get it checked by a solicitor or Public Trustee. They can make sure it’s been done properly.
If your will isn’t done properly, it will be invalid. Please also make sure you put your will in a safe place and tell someone close to you where it is.
If you already have a will, you may still want to review it, especially if your situation has changed in recent years.
For example, if you:
• got married
• divorced or separated
• had children or grandchildren
• had a significant financial change
• lost your spouse (or someone else who is named in your will) through death
10.If you plan to refinance, do it soon
If refinancing is on your agenda, this shouldn’t be left until 2023. If you have a house and have not refinanced yet, what are you waiting for?
For years, interest rates have been the lowest in history, but there are signs – specifically increasing inflation – that interest rates are likely to rise in the near term. The opportunity to lock in today’s historically low rates for most people’s largest monthly payment and largest asset may be coming to an end.
11.Review your financial plan
Make an appointment with your financial advisor and discuss:
• any changes to your goals, situation, or finances (including changes to your income, expenses, or assets)
• whether the level of risk you’re comfortable with has changed
• whether your current personal insurance cover is right
• how you’re tracking against your goals
• whether any changes to laws or financial products could affect you; or
• whether you need any adjustments to your plan.
Please get in touch with us today for all your accounting and finance needs.
We'll help you get organised for a financially fit year so you can reach your goals and create the wealth you deserve.