New Years is a great time for a financial fresh start. The start of a new year brings with it fresh opportunity to take charge of our finances and make our money work for us.
As we roll into 2020, we take a look at the financial New Year's resolutions you should be making.
1. Make a financial plan
Your first resolution for 2020 should be to make a financial plan. This should lay out what you want to achieve with your money in 2020. Your plan should reflect your life goals – do you want to start investing in the ASX, save for a house deposit, or increase your retirement nest egg? Be specific – how much do you want to invest or save? A concrete figure is much easier to measure your progress against than an unspecified goal.
2. Plot the path
Your second resolution should be to plan how you are going to achieve your goals for 2020. If your plan is to save $10,000 to invest in the ASX, figure out how you are going to do this. Breaking your plan down into steps can make this clearer. To save $10,000, you will need to save around $200 a week. Once you know this you can review your budget to see how you can make this happen.
3. Reduce your debts
The most reliable way to increase your savings is to reduce your debt. While you're in debt you are paying interest, which leaves you with less income to save or invest. Focus on high interest debts such as credit cards, personal loans and car loans as a priority. If this seems overwhelming, break down what you owe into manageable chunks. You could start by making extra repayments on your highest interest debt. Once that is paid off, move to the next highest interest debt.
4. Invest in you
Once you have your debts paid off, your next resolution should be to invest in yourself. Resolve to build your financial knowledge so that you are in the best position to manage your money. If your plan is to invest in the ASX, take the time to learn about the share market and start to keep an eye out for shares you may be interested in investing in. Take the time to understand your investment options. The time spent is an investment in your future.
Foolish takeaway
The start of a new year is a great time to work out your goals and financial plans. Then you can put your plans into action to take control of your financial future. These New Year resolutions should help get you started on the right track.
