We wanted to start the year off with our 7 principles for Financial Success:
1. Spend Consciously – We all know that budgets just like ‘diets’ don’t work, however with your weekly spending for Food, Fuel and Fun being done on a visa debit card it helps you to spend consciously, as you are using your own cash instead of a credit card.
You know how much cash you’ve got for the week and if you require more funds for other expenses or purchases, you consciously need to request those funds via a redraw.
2. Buy Assets not Liabilities – you want to be investing regularly into assets that go up in value over time (super, shares, property). Any ongoing repayments for cars, boats, and caravans etc that drain your cash flow each month and also go down in value over time is a liability. The name of the game financially is to have no liabilities (debt free) and a few assets (investments) that produce a passive income for you and grow in value.
3. Invest in yourself – you are the greatest income producing asset. By investing in courses and upskilling yourself, you will enhance your skill set which leads to pay rises and higher paying jobs over time. It is often easier to increase your income than it is to cut down your expenses.
4. Pay off Debt – A debt free life gives you freedom. The faster you can pay down your home loan the quicker you save all your monthly repayments. If you save 15 years of monthly loan repayments, you can use the funds to buy more experiences with family and friends and put money towards investments such as superannuation. Getting your income to work for you against your debt and having a money management system in place will definitely fast track your debt free date.
5. Avoid Lifestyle Creep – Most Australians receive pay rises every few years, however they don’t end up with any more in savings. Instead their lifestyle and living expenses just creep up. They’re buying a nicer bottle of wine or going to more expensive restaurants. The key to avoiding lifestyle creep is to have a set weekly $ amount for your food, fuel and fun. Regardless of how much your income increases this figure doesn’t increase anywhere near as much, and allows you to quarantine the surplus created by your increases in income.
6. Cut unnecessary expenses – Reviewing your subscriptions that you aren’t using as often, and auditing all of your insurances and other fixed costs will all help cut out unnecessary expenses.
7. Invest 20% of your income – Your employer is already investing 11% of your gross salary for you into Super, simply invest another 10% of your salary towards investments such as super, index funds (shares) or property.
If you can focus on these 7 areas throughout 2024 you will be well on your way to a financially successful 2024!
