Ask any young(ish) person today about what concerns them most in life and many will probably tell you the same thing: money.
We live in an age where it's terribly difficult to become approved for a loan of any sort or break into the property market. You might not be in a place in your life where you're looking to buy or save a lot of money. But by having some sort of strategy in place could make future you very happy.
Sort Out A Budget
Budgeting is a money-savvy person’s favorite word. When it comes to budgeting, it saves you from overspending, which for anyone is a huge help, especially if it’s a business. Budgeting your money isn’t difficult and should be done on a monthly basis depending on how much you make a month and whether the figures fluctuate. It effectively puts you in control of your money so you can see what it is you’re spending your hard-earned cash on. This all goes towards hitting or not hitting those financial goals.
Ideally, you want to do monthly budgets and an overall annual budget to help tailor the monthly ones. Start off by listing all sources of income, whether that’s through your full-time job, any cash you make on the sides and benefits. List all your necessary outgoings like rent or mortgage payments and household utility bills. Any luxuries such as memberships and subscriptions should also go on this part too. Then finally, food and other expenses such as social outings and shopping should go down.
Once you’ve given yourself a full budget, you can see how much is left over and then you can look at where you can save money or cut out some of the outgoings. Hopefully, you’ll be able to make some savings each month.
Get Rid Of The Debt
Debt isn't something you want hanging over your shoulders for too long. Life can be full of surprises and curveballs, so it’s good to pay off your debts as quickly as possible. This is especially important when you’re coming up to retirement because that income you once had on a monthly basis will soon be gone. Try and transfer any loans and remaining debt onto one or two credit cards so that it’s all in one place. You then won’t have to lose sleep over loan sharks or big fines for missing payments.
Try and avoid going into debt where possible, as it should really only be used for emergencies.
Have An Emergency Back-Up Fund
It’s not something many of us will have thought about when we’re young and free, with no responsibilities other than ourselves. But as you get older, your commitments change and your responsibility increases. From buying your first property or getting a new car, to starting a family. All these things cost money and only increase the likelihood of unexpected bills to pay. So it’s useful to have an emergency back up fund that’s available for when you don’t have the funds.
You should aim to have a few thousand dollars in there to cover you for most costs should they ever crop up and if you have a partner, it’s useful for them to do the same too so that you have ample savings available.
The Bare Foot Investor outlines some great saving strategies for young couples and families.
Save Extra For Retirement
Not all retirement pots are substantial, so it’s important to look at your current lifestyle and whether the cost of it will dramatically fall when you retire. Compare that with how much you’ll get from your retirement fund, and it might not be enough to sustain your lifestyle habits. Therefore it’s always good to have extra for retirement in the form of a savings fund or by adding to the pot.
While on the subject of retirement, it’s good to have the plans in place for your family, should you want home care like the level 4 aged care package, live in a care home full-time or live with other family members. It’s also handy to have a will in place as soon as you have children or even if you have a big responsibility like a mortgage to pay for.
Invest And Spread Your Savings
Over time, you may end up saving some extra cash that’s just sitting pretty in your bank account, earning very little interest for the amount it is. For some, investment is a good way of potentially increasing your funds, and this can be done in a number of ways. Stock investment is the most traditional form of investing and is pretty easy to do once you understand the basics of how it all works. Investing in property and having a property portfolio can help you secure a more financially stable retirement fund. Not to mention if you end up buying a property abroad, it makes a great holiday home!
It’s important to diversify your investments as spreading them will avoid losing it all, if things hit the fan. As you draw closer to retirement, you may want to take fewer risks in investing as you might not be able to afford to do so, with having no income to back you up.
Seek Advice From A Financial Advisor
And finally, for those who don’t really know how to manage their money, it’s always a good idea to seek advice from a financial advisor. These advisors are great for many stages in life, from finding the right mortgage to giving guidance on investment options. Depending on your funds and the income you currently make, their professional advice might come in handy for planning your financial choices and for saving money when needed.
There’s a variety of different financial advisors available, with some specializing in specific areas. So it’s worth, depending on what you’re after, to do some research prior to reaching out.
Saving money can be much harder than spending it, but the sooner you do it, the easier you’ll make it on yourself down the line. Start using these tips to get your own finances in order.
