2008 was a horror one financially for most of us. Alot of people have asked me for a few ideas for creating their own list of New Year’s resolutions to help put their finances in better shape in 2009. With the Christmas cheer gone, now is the best time to get serious about your finances. Here are 12 resolutions (one for each month) for you to try and achieve in 2009.
After 12 consecutive rate rises, we were blessed with a few nice large interest rate cuts at the back end of 2008. Take advantage of these lower rates (and petrol prices) whilst you can and maintain repayment levels at June 2008 levels. Cashflow was tough in 2008 so try and create a buffer this year.
Start a share portfolio
The best returns in the sharemarket generally occur the year after it crashes. The average return for these “rebound years” has been 28%. There are some bargains to be made in 2009. Remember the maxim to “buy low, sell high.” Spread your risk by diversifying with a few stocks and purchase over a few months.
Cut up the credit card
It is probably the hardest thing to do as most of us view the credit card as our “security blanket”. But it’s really the devil and the quicker that you take decisive action the better.
If your income is under $30,342 then you can get the maximum $1,500 government co-contribution if you put a personal contribution of $1,000 into super. It phases out when your income reaches $60,342. If you haven’t started yet this financial year then start putting in $40 per week from now til 30 June. Free money.
Pay off HECS debt before 1 June
HECS debts, which are adjusted each year by the CPI factor, are set to rise by around 5% on 1 June. Unlike previous years when inflation was lower, this is probably more than what your bank is paying on your savings. As an extra incentive there is a 10% discount for voluntary payments.
Don’t incur late fees
Get into the habit of paying bills on time. It amazes me how many people are lazy and get slugged with late fees by being inefficient. $30 here and $50 there adds up over 12 months.
Write up a budget
Most people get put off with having to write up a budget but they are really important for any household savings plan. Excel spreadsheets has an excellent tool to make it an easier process. Simply type “Personal Budget Template” in the help menu.
Set-up 4 new savings accounts
I recommend setting up four savings accounts – one each for education, holidays, Christmas and emergencies. Put a regular amount from every pay packet into each account. The key is to be disciplined and don’t access these funds except for their specific purpose.
Do some study
The best investment is in yourself. Nobody can take your education away from you. And you are never too old to learn new tricks. Extra study may lead to a promotion or a better paying job.
Make yourself indispensable
Times are tough for businesses too and a few are going to make the tough call and lay off some staff. The key to make yourself indispensable with your positive attitude and willingness to do a variety of tasks.
Cut back on discretionary spending
There are two ways to save money – earn more or spend less. Have a look at your spending habits and see “how much fat” you can cut. Eating out, socialising, technology, clothing and transport are the main areas to focus on. Look for bargains and buy in bulk. Worry about the cents and the dollars will look after themselves.
Enter into a few fun runs and challenge yourself to get fit. Behind the scenes you will be reducing your binging on junk food and alcohol and at the same time helping your savings.
GOLDEN RULES WHEN SETTING GOALS
- Write them down – by putting your goals onto paper you develop a challenge for yourself to try and achieve. Don’t be afraid to put some pressure on yourself.
- Be specific – don’t just say that you are going to save. Put down an exact figure that you want to save such as $325 per month.
- Goals must be realistic – you are not going to make a million dollars so it is a waste of time putting that down. You want to set goals that are challenging yet attainable if you put in the hard yards. Dangle the carrot sufficiently in view by not making them easy either.
- Set time frames – don’t leave your goals open ended. Set a date that they must be achieved by. For example, pay off your credit card by April 2009.
- Monitor your goals – put a note in your diary or Outlook calendar to review your goals every three months. A mid-year financial check-up can set you back on track if you have been slack.
- Don’t get lazy – get into the mindset that you are going to take control of your finances this year and just do it!