Get on top of your finances in 5 easy steps
Get on top of your finances in 5 easy steps
- February 18, 2017
- Posted by: Daniel McGregor
Here are 5 easy ways to start taking control of your financial situation… remember, money is just a servant, you are the master!
Step 1: Review your financial situation
The only person responsible for your financial situation is you. Work out where your finances are right now. Write down what assets and debts you have. Take away your debts from your assets and that’s your net financial position.
If you’re like most people, the assets are not far enough ahead of your debts to even be close to being able to afford to retire one day.
So, the next step is to get on top of your debts.
Step 2. Take control of your debt
Borrowing money for the right reasons is useful as it allows you to buy something you can’t yet afford and pay it off over time. The trick is to borrow for the right reasons (i.e. like buying a house, not for paying for new TVs and holidays) and to not borrow too much. Once you do have debt, it’s important to ensure you’re getting a good deal on your interest rate, possibly look at consolidating loans to reduce interest, and make sure you are paying well above the minimum repayments so that the debt is paid off ASAP.
GOLDEN RULE: Pay off credit card debt every month as it’s likely to have the highest interest rate.
Step 3. Build an emergency fund
It’s hard to get ahead financially if you’re not saving anything.
Start saving some money from every pay cheque and build up an emergency savings account that doesn’t get touched, except in the event of an emergency. Once you’ve got that to a reasonable level, then you’ll be well and truly in the habit of saving and those continued savings can then start to be used to build wealth.
Step 4: Be your own super hero
Most people don’t understand superannuation because no one has really explained it to them. Super is simply a way to save money for your retirement and pay less tax on the money. You have enormous control over it when you learn exactly how it works. Once you understand the power of super, you’ll pay attention from that moment forward. Some people will tell you there’s a big downside – you can’t touch it until you retire. For me, that’s its biggest upside. It will be there for when you most need it – when you’re unemployed because you chose to retire and therefore need money to pay yourself an income. Where’s that money going to come from? Well, the easiest way is to make super work for you.
Step 5: Invest in financial advice
Hopefully, these ideas are starting to give you a heads-up that managing money is important. A relatively small investment in financial advice now could make tens of thousands, if not hundreds of thousands of dollars difference to your financial future.
Get in touch if you’d like to see if we can help,
Cheers,
Daniel