The new year is a great time to revisit your goals and dreams for the future. If everyone around you is cracking on with their resolutions and you’re still not sure what you should aim for, you might need to change your time frame. Most New Year’s resolutions are things that can be achieved in a year, whether it’s getting in to a consistent habit or reaching a particular end point. But there’s one worthy goal that, while you can start working towards it now, is actually pitched way in to your future.
Retirees who are living the dream most likely didn’t just win lotto. Chances are they took steps to build their wealth. Steps that, broadly speaking, you can emulate. And if you haven’t thought about it, well, now’s the time – because the earlier you begin, the better.
It all starts with getting back to basics.
For budgeting to work, it needs to be sustainable. That generally means smaller cutbacks and sacrifices over a longer time frame. If you failed the last time you tried to stick to a budget, it might’ve been because it was unrealistically strict for your lifestyle and needs.
Try this basic budget revision strategy: go through your bank accounts, shopping lists and other records, and identify the must-haves that you can’t not spend money on. Things like your utility bills. Consider how you might be able to get better deals on them. For example, could you call your electricity company, tell them you’re thinking of switching, and ask what they can do for you? Could you look at your call volume and data usage, and shop around for a better mobile phone plan? When it comes to non-essentials, try cutting back before cutting out. For example, reduce your daily bought lunches to, say, three times a week to start with.
One budgeting basic is paying yourself first. If you always wait ‘til just before payday to see what’s ‘left over’ to save, you’ll probably find there’s never anything. Decide on a starting amount – say, $50 a week – and set up a direct debit into your savings account for the day (or day after) you get paid.
You can also build your savings through super contributions. The trick is to start small; small enough that you don’t notice the difference to your disposable income. Look at it this way; depending on your tax bracket, $50 out of your pre-tax income could be half that in take-home pay. You could spend more each week on… well, just about anything.
The general idea of investing for growth is that you’ll beat inflation and end up with more in the bank than if you’d just saved. In other words, your money should work as hard as you do.
To make this happen, you should consider a variety of different investments, of varying risk levels. Your final choice will depend on your retirement balance goals, tolerance for risk, and the capital you’ve got to work with now. Shares, property, bonds, ‘alternative investments’ – there’s a lot to choose from.
Review, review, review
As with any goal in life, you need to regularly review your progress. You may even need to review your goals in case, they have shifted. You’ll also want to run over the actions you’re taking to achieve those goals – such as the basics above – to see if there are areas you can still improve.
If you’re overwhelmed with the choice, or not sure what would fit your needs, make an appointment with us today. We’ll walk you through your options, so you can make a confident and informed decision.