Goodbye Christmas, goodbye 2020, hello 2021!
For some, January is typically a time of rest and recuperation. For others, it’s time to get back into the swing of things after a break. Fitness ramps up, the junk food gets cleared out, alcohol is limited and the budget is reset.
New Year’s is the perfect time to get started on our resolutions. It’s also the perfect time to set up or revisit our budget and plan for 2021.
Where you share finances, we recommend you do this together. Having common goals and agreeing on spending is the best way to success.
Here are our top 10 tips for setting yourself up for financial success in 2021:
#1 Understand your 2020 spending
Go into your spending reports. Understand where your money is going. You might like to check these categories –
- Groceries – this category includes purchases like coffee beans and alcohol, you may wish to look further into the detail to understand the big impacts
- Fees and Charges – ATM fees, credit card interest, home loan interest & fees etc. are included here
- Hobbies & Entertainment
- Dining, Bars & Cafes – depending on where you live, this might have been fairly minimal in 2020 – try not to let the easing of social distancing and COVID restrictions let you blow this category
#2 See what savings you can make this year
Once you have your spending information, see where you can make cuts. Can you spend less on groceries or eating out? Can you pay less for insurances, get a discount on your home loan rate, and negotiate with your gas and electricity provider for a better rate?
#3 Dining, Bars and Cafes
Its so tempting to eat out, and routinely spend on entertainment. When you work hard, it’s important to have balance. That doesn’t mean you shouldn’t look for value and ways to have just as much fun while spending less. When you’re heading out, be creative and consider a weeknight instead of a weekend. Invest in the Entertainment book and get discounts, or share events and activities at home rather than out.
#4 Have a goal
Think about what you want to achieve with your money this year. Do you want to take a holiday (domestic most likely!)? Save for a house deposit, a baby or a wedding? Do you want to pay extra off your mortgage? Think about how much money you will need to meet your financial goals.
#5 Align your commitments with your budget
Take into consideration your goals and commit to making adjustments to your spending to eke out the extra you need to put towards meeting them.
You can make changes to your budget in Manage my Spending at any time. Check the amounts in there align to your expectations for this year. Where expenses will be higher or lower, make sure you record them.
If you haven’t already set up your budget, now’s the perfect time to do so!
#6 Debt repayment & savings first
Check that your money decisions are making financial sense. Paying 20% interest on your debt is crazy when you’re earning less than 2% on savings. If you have a credit card or other unsecured debt repay that before saving! Have you called your mortgage lender to check that you have the best deal? Make it a habit to call the bank every year and renegotiate that home loan rate.
Set up automatic transfers from your transaction account (or your pay) to a debt or a savings account that is difficult to access.
#7 Banking Structure
Make sure your banking structure suits your financial goals. Check Optimise my Banking for any recommendations that MoneyBrilliant has provided based on your connected accounts.
It’s great to have an account for spending, an account for bills & emergencies, and an additional account for savings. Make sure that you find accounts with no or minimal fees to get the best value. Savings are less accessible in an account without an ATM card where funds can only be transferred overnight.
#8 Credit Cards & Store cards
You only need one! Review your credit cards, annual fees, interest rates and choose the best deal. If you have high balances, consider a balance transfer and work towards one card.
#9 Make new spending habits
Going out to dinner? Go BYO. Purchase 2 take away coffees a day? Switch to 1 strong one. Learn to say no to spending opportunities.
Do your friends want to go out to brekkie? Move it to a park with a BBQ and enjoy some touch footy to run off the food saving yourself some $ as well. Put a spending limit on nights out.
#10 Commit to checking in
Once you’ve updated (or set up) your budget and agreed on your goal and spending changes, set aside time to regularly to check in. Life has the habit of sending us off track and having a monthly catch up with your money will help you make adjustments to keep as close as possible to meeting your goals by the end of the year.
About MoneyBrilliant and how we can help
At MoneyBrilliant we believe that when people make better decisions about their money they live better lives. We can help you get your finances sorted, understand your spending, find banking products that will earn you more or cost you less, set savings goals, build a plan to own your home, track important insurance details, get your debt under control and build a retirement plan. MoneyBrilliant Plus customers can also join our money coaching programs. Whatever your starting point, we can help.