Forget a new gym membership – here’s a list of New Year’s Resolutions that will trim the fat from your finances and boost your savings for the new year.
- Audit your personal spending
Yes, it’s a little scary and it may bring to light some bad habits you wanted to keep buried. However, a financial audit is the best way to identify your unnecessary expenses and key ways you can save hundreds of dollars this year.
All you need to do is go through your financial records (bank statements, credit card bills etc.) with a fine-tooth comb and look at the different areas your money is going to, and how you can reduce your spending.
- Create a budget
After you’ve finished your audit you should be able to see a bigger picture of which areas you want to give your money to and which you don’t. If you need a helping hand, the Australian Securities and Investments Commission (ASIC) website has a great budget template.
- Pay off your debt
Take the weight of debt off your shoulders this year by using your new financial budget to help pay back your debt. If you have multiple sources of debt, such as a credit card debt and a mortgage, experts recommend paying off the debt with the highest interest rate first.
- Improve your credit score
Your credit score cannot be improved overnight – so make it a long-term goal for your year. You can help to improve your credit score by ensuring there are no errors in your report, paying your bills on time, reducing your debt and the number of loan applications you make.
- Cut up your credit card
Like many Aussies, if your credit card is causing the most damage to your finances through overspending and growing debt, it could be worth cutting up the plastic and starting fresh this year.
- Call your bank and get a lower mortgage rate
Are your mortgage repayments killing your budget? A simple phone call to your lender could save you thousands over the life of your loan. There are dozens of home loan lenders who offer rates under 4 per cent, and most banks will offer new customers lower rates than you’re paying.
Compare rates from your own lender and others, call your lender and request one of these lower rates. You might be shocked at how much they’re willing to reduce your interest rates by, and how much you’ll save. Customers who ask for these discounts often get them.
- Live below your means
Having champagne taste on a beer budget won’t do much for your savings. Reduce unnecessary expenses by spending less than you earn. Your new budget should come in handy to help this process.
- Invest in your retirement
One of the best New Year’s Resolutions you can make is to invest in your retirement. You can do this through salary sacrificing or by making non-concessional super contributions.
According to ASIC, if you make less than $51,813 per year (before tax) and make after-tax super contributions, you are eligible for contributions from the government. “If you earn less than $36,813 the maximum co-contribution is $500 based on 50c from the government for every $1 you contribute.”
- Kick brand loyalty to the curb
If you have a love of designer label handbags, or have had an account with the same bank since you were a child, it’s worth researching how your brand loyalty is impacting your budget.
Make efforts to kick your brand loyalty to the curb this year, whether it’s through buying the cheaper (and still tasty) options in the grocery store or comparing more competitive banking options.
- Make your own lunches
RateCity research found that, on average, Aussies who buy their lunch every day were spending around $10 a day or $2,400 a year. Preparing your own lunches at home should cost you around $4 per meal – a saving of $6 a day or $1,400 every year.