Want to put your savings in order? The new fiscal year is a great place to start.
It’s a clean slate that allows you to set and track your goals for the next 12 months.
Here’s how to get started, regardless of your income.
1. Take a budget overview
You can’t set realistic financial goals and savings goals without knowing how much you’re making (and what you’re spending it on).
A new fiscal year is an opportunity to sit down and calculate all the known expenses that you have to come. Car registration, health insurance, and mortgage payments are all fixed costs you need to plan for. Once you’ve listed those big-ticket items, think about your regular expenses like groceries, travel, and going out.
Don’t worry too much about the details at this point, you just want a rough estimate of what you know you’ll spend versus your annual income – what’s in versus what’s out. Calculate these numbers to see what you could potentially save.
2. Start tracking your daily expenses
A high-level view of your finances is great, but the reality is that most of us spend money all week long on “incidentals” that add up quickly. A coffee here, a lunch there, a little splurge, and your savings are spent. An app that tracks your daily expenses can be a useful way to understand where your day-to-day money is actually going.
Technically, you can do all of this with a spreadsheet, but a budgeting app is an easier option. Most major banks offer free budgeting tools, and searching online can point you to several free apps.
3. Pay yourself first
Is your bank balance functioning at full capacity by the end of the month? Try to pay yourself first. Simply allocate a percentage of your income to a savings plan and deposit that money into the appropriate bank account as soon as you get paid. Everything you have left is there to pay your bills and expenses until the next payroll cycle.
Better yet, set up these payments as direct debit, so the whole process is automated and you aren’t tempted to spend money.
If you’re trying to create your super balance, consider sacrificing your paycheck. This transfers a designated amount into your super fund with each paycheck. It can also help you lower your income tax rate.
4. Find a reason to save
Having a specific goal in mind can help keep you motivated. The same goes for savings. Whether it’s a home loan, a new car, or an emergency fund, knowing what you’re saving for will help you stay focused and truly reward your efforts.
5. Look for ways to cut costs
If you have a mortgage, it’s probably your biggest monthly expense. So it’s a good idea to shop around and see how competitive your current interest rate is. A 1% difference on a $ 500,000 loan is $ 5,000 per year.
Your home loan isn’t the only bargain expense. Electricity, mobile plans, internet, and insurance policies can all be renegotiated or transferred to other service providers. Oh, and if you don’t drive to work anymore, you may be able to lower your auto insurance premium.
6. Consolidate your debt
Australians owe around $ 20 billion on credit cards.
This translates to an average credit card debt of $ 2,933 and $ 1,567 in interest payments per card per year.
Anything you can do to reduce your credit card balance will save you money. Whether it’s making a one-time payment to reduce the balance, consolidating your credit cards into one credit card with an interest-free period, or taking out a loan with a lower interest rate to pay off the loan. credit card – reducing the amount of money you owe on credit cards is one of the easiest ways to save money.
Don’t forget your tax return
End of the year is also tax time. While this is usually not a cause for celebration, you may be eligible for an above-average refund due to COVID.
The Australian Taxation Office (ATO) has released new guidelines for people working from home due to the COVID-19 pandemic. The “shortcut method” means that you can potentially claim “80 cents for every hour you worked from home” as a tax deduction.
This flat rate approach is the easiest way to claim your extra expenses, but there are a number of different ways to increase that reimbursement. You can find out more through the ATO website.
Saving money isn’t just about income. Equally important is what you do with that money.
The new financial year is a great opportunity to find your motivation to save, to take a realistic look at your financial situation and to take the first steps towards reaching your goals. And if you happen to receive a larger tax refund than usual, it can help jumpstart your savings plan.