Australians are being encouraged to start the new year by setting financial goals and taking control of their money.
ASIC, the financial services regulator, said that having a financial plan is “key to getting on top of your finances” – yet only 23 per cent of Australians say they have a long-term plan.
ASIC has recommended five financial resolutions for 2018:
- Make a plan for your money
- Take charge of your debt
- Create a savings balance
- Take stock of your insurance
- Maximise your super
Make a plan for your money
“A budget is the cornerstone of a financial plan,” according to ASIC.
“Having a plan in place to manage your money will help you track your spending and understand your money habits.”
ASIC has a budget planner to help you work out where your money is going and where you might be able to save.
Take charge of your debt
ASIC said it’s also important to take control of any debts you may have, including any credit cards that may have been over-used over Christmas.
“You can start by making extra repayments on your smallest debt, and when you have paid it off move onto any other debts,” ASIC said.
“A credit card debt of $2,000 could take you over 12 years to pay off and cost about $2,150 in interest, if you only pay the minimum repayment.”
Create a savings balance
ASIC’s third tip is to build up a financial buffer, so you won’t have to borrow money if something unexpected happens.
“A good tip for building up a savings buffer is to ‘set and forget’, by opening a separate savings account and making regular payments automatically via your bank or from your pay,” ASIC said.
Take stock of your insurance
Having the right insurance in place is very important, but it pays to shop around, according to ASIC.
“It’s important to review your existing policies to ensure they cover everything you want included, and if they don’t you can find a policy that does,” the regulator said.
“Make a resolution to compare the policies offered by other insurers when your home or car insurance comes up for renewal to ensure you get the best deal.”
Maximise your super
Finally, ASIC said it’s important to find out your superannuation balance so you can take control of your retirement savings.
“If your super is spread across multiple funds you should consider combining multiple accounts to save fees,” according to ASIC.
“Making extra contributions and reviewing your investment options can make a big difference to your retirement funds.”