Gyms, weight loss companies, and self-help authors make a killing in the first week of January as the ghost of Christmas past is turned into hare-brained New Year’s resolutions.
My experience of RaboDirect customers is that you’re a fairly financially savvy bunch, with savings under your belt. The majority would have budgets and are unlikely to have excessive credit card and personal debt – although December spending is traditionally 27% higher than other months of the year
Even so, most of us can streamline our finances one way or another. Here are some suggestions:
Learn from past mistakes. Write down the 10 biggest financial mistakes you’ve made, put them in order, and then reflect on them. The best way to avoid repeating financial mistakes is to admit to yourself what you did wrong, and then move on. You can also take a new approach to an old problem.
Get paid what you’re worth. Whether you’re employed or self-employed, consider whether you’re properly recompensed for what you do compared to others in the same market. If you’re not, it’s a good time to take action.
Keep good records. Do you struggle to find paperwork; find yourself in a panic at tax time because important documents are missing or mis-filed; or sometimes find that you’ve not kept an important receipt? Putting systems in place is the answer to this. Everyone’s different. I use a filing cabinet, series of A-Z expander wallets for things like receipts for the current financial year, and lever arch files to keep bank statements and utility bills in order. You could keep scanned copies of documents if space is tight.
Prepare for your own demise. Sadly we all pass on eventually. If you want to make it easier for your loved ones, write a Will, set up or review trust structures, and prepare a paper trail for your executors. That way less of your hard earned money will be wasted on lawyers and trustees trying to tidy up the mess you left behind. This isn’t just a step for older folk. Five per cent of deaths in New Zealand are for the under 40 age group with another 20 percent for the 40-67-year age group.
Spend less than you earn. Lifestyle inflation means even good earners are often putting less aside in savings than they ought to.
Don’t just save your money; you won’t keep pace with inflation. Invest in shares, funds, commercial property, a business or whatever is going to see your net wealth grow.
Take a reality check. How many more of the above steps could you do? Are you really telling yourself the truth? If not, it’s time to take stock.
Whatever you need to do, make goals, not resolutions (which are made to be broken), and make sure you have a clear financial strategy. People with strategies are more likely to succeed in life than those who muddle their way through life.