Five ways to take control of your money, grow your wealth and start enjoying financial peace of mind.
It can seem daunting, but you’ll definitely feel the benefit once you’re ‘the boss’ of your own finances. It’s all about getting better at managing your spending and identifying opportunities to grow your wealth. Add in the goals you’re saving for and it can even be exciting.
Five areas to focus on
1. Write a budget
‘Knowledge is power.’ Having a clear picture of where your money goes each month can help you identify where you can perhaps cut back in order to put more into savings or investments. What’s more, it’s easier than ever thanks to the number of tools and apps available. They can help you track your spending, define your financial goals and develop a budget to help you reach them.
Start by tracking your spending for a month or two. You’ll discover where you’re really spending your money, which is the first step in spotting where you could be saving more. Try the NAB Budget Planner Calculator or download the ASIC Money Smart’s TrackMySPEND app.
2. Set savings goals
Most of us find it difficult to motivate ourselves to save but give yourself a good reason and it can be a different story. Knowing you’re working towards a target – say, a holiday, house deposit or even stopping work early – can help you avoid temptation and make it easier to put funds aside each month. The old saying ‘out of sight, out of mind’ can help, too. Think about setting up an automatic direct debit from your wages so you don’t even think about it. If it’s going into a separate bank account, all the better.
3. Take control of your credit cards
The interest on any credit card debt can eat into your money so prioritise paying them off as quickly as possible. Focus on the card with the highest interest rate first, while continuing to make minimum repayments on your others. If your balances are high, you could consolidate them into a personal loan, mortgage or different credit card with a lower interest rate. That way, you can pay the debt off faster. Lastly, try to keep credit cards for last-resort spending rather than everyday purchases.
4. Sort out your super
Your superannuation is potentially one of your biggest assets, so it makes sense to take an interest in how it’s invested.
Choosing an investment mix that’s right for your life stage can help maximise your retirement nest egg. If you expect to be working for a decade or more, this could mean a strategy with the potential for higher returns. If you’re planning to retire soon, a strategy that protects against market fluctuations may be more appropriate.
Making voluntary super contributions can have a big impact on your final figure. Use our Retirement forecaster to see the impact extra contributions could make to your retirement savings.
MLC makes it easy for you to keep up to date on how much you can add each year – just visit the ‘Boost your super’ section of the website. It’s also sensible to annually review any insurance policies you hold through your super fund to ensure they still meet your needs.
5. Explore your investment options
It’s also good to spend some time developing a personal investment strategy outside super to help meet more of your personal goals.
With many of Australia’s real estate markets coming off the boil, many of us are exploring other ways to generate income and build wealth. These could include investing in shares or managed funds as well as in traditionally more secure instruments such as bonds and term deposits.
Whatever investment strategy you choose to pursue, it’s wise to consult a financial adviser first. They can help you work through which would be appropriate for you.
Whether you use a financial adviser or not, educating yourself is always a good idea. There are free resources available on the different types of investment opportunities available, including ASX online courses and, for those planning for retirement, visit our Retirement hub.
Becoming the boss of your wealth takes a little effort but it can be very rewarding – financially and personally. If you need help getting started, MLC’s Advice team can provide advice tailored to your circumstances and goals. Your first consultation is free.