If you like to make resolutions on New Year's Day, you already know how hard it is to stick to them. The New Year brings around an opportunity for change. This January can provide a chance to have a look into your financial situation and hopefully inspire you to stay committed to new financial resolutions in 2023.
Here are some quick tips to help get you started on your financial success journey in 2023.
Create a Budget
Start with dusting off your budget. If you don’t have one it's time to create a budget. To start, print off your bank statements for the past three months, this will show you where your money is currently going. Then, you should total how much money is coming in or the income you have, and how much is going out, and then work out the difference.
You will either have money left over or be spending more than you are earning. The aim is to have as much money left over as possible so you have money left in your pocket to save for your goals, invest in your future, or pay the debt off faster.
If you want to change how much you have left after the budget, focus on the expenses that aren’t necessary or don’t bring you a substantial amount of happiness. You shouldn’t have to cut out the things that you love to reach a slightly higher amount of money left over.
Keeping up to date
While you’re looking into your finances, it could be a good idea to ensure that your will is up-to-date and that your income protection, life, car, health, house and contents insurance are right for you.
Consider getting an insurance review to go over your insurance. This can help ensure that you’re not paying for more health insurance than is necessary, or your house isn’t underinsured if you’ve recently renovated. Going to an insurance adviser can be helpful or even looking at the different insurances you have and comparing them with other options to check if you are paying more for less coverage.
Managing your Debt
Eliminate high-cost, non-deductible debt. This means you should pay off any high-interest debt first, especially debt that cannot be deducted as a work/business expense. Try to pay off credit card debt and avoid borrowing to buy depreciating assets, such as cars. If you have credit card debt, now is the time to cut up your card and shop around for a low-interest or zero-interest card so you can transfer the balance and start attacking the debt.
The cost of consumer debt adds up quickly if you carry a balance. Consider consolidating your debt to get more on top of your debt and feel less stressed from having debt from multiple sources.
Prepare for retirement
Dig out your latest KiwiSaver statement – when was the last time you compared what their fees are, what fund category you’re in and what are their returns? Take a look at the National Capital HealthCheck to see whether it’s worth changing your fund or provider, or even to free up your time.
Whatever your age, putting in place the right KiwiSaver fund should take top priority in your personal finance resolutions for 2022. With so many options and providers, this is one area that benefits from the knowledge a financial adviser brings.
Finally, remember you don't have to do everything at once. There are a lot of things you can do to improve your financial success and reach your goals by taking one step at a time. Good luck with making some progress towards your financial goals and we wish you a Happy New Year!