Your fi­nan­cial best prac­tices for 2017

Monthly Chronicle - - Business - RAJ LADHER Raj Ladher is a lo­cal ex­pert on mort­gages and fi­nan­cial mat­ters. Orig­i­nally from the UK, his con­sul­tancy firm is now based in Sydney.

Its the New Year and if you're any­thing like me, you would have gained a few pounds around the waist and lost a few pounds in the wal­let! It's a yearly oc­cur­rence and most of us wouldn't change a thing! With Christ­mas shop­ping and Box­ing days sales out of the way, it’s time to as­sess the dam­age, so I've put a few point­ers

below on how to get ahead in 2017.

Set goals and make a plan - the first few months of the year are al­ways a good time to plan for the year. Your plan needs to be clear and con­cise, i.e. pay off your credit card bal­ance by 1st March and have $10,000 in the bank by 1st July. A plan needs to be dis­cussed with all those

in­volved as it needs to be agreed so that ev­ery­one is ac­count­able.

Track­ing progress is also a very im­por­tant fac­tor for your plan, i.e. check it monthly, quar­terly, etc. Put the plan down on pa­per in or­der to track it more eas­ily. If the plan isn’t work­ing then it most likely is un­re­al­is­tic, so you ei­ther need to be more dis­ci­plined with your spend­ing or run through the bud­get plan­ner again to tweak – how­ever the lat­ter op­tion will mean the plan will take longer to achieve.

Within the plan, I have made a list of a few items you can start with.

Pay­ing off bad debt, for ex­am­ple credit cards, needs to be first on the list due to the amount of in­ter­est charged. If the debt is too much to be cleared in one go, then an­other so­lu­tion would be to con­sol­i­date/trans­fer the debt to a zero per­cent credit card. Many credit card providers of­fer a short term of ap­prox. 12-18 months in­ter­est free for bal­ance trans­fers.

Mak­ing over­pay­ments on your per­sonal/car

loan should be next in line depend­ing on the in­ter­est rate. Al­though it is im­por­tant to save, pay­ing off debt where you are pay­ing in­ter­est makes more fi­nan­cial sense.

Once all your debts are cleared, it’s then time to start sav­ing. To un­der­stand how much you can re­al­is­ti­cally save, you need to com­plete a bud­get plan­ner. This will al­low you to un­der­stand your in­come and your ex­penses equalling your sav­ings amount. If the amount is not enough to reach your goal, the bud­get plan­ner will al­low you to iden­tify where you could cut back. Hav­ing an emer­gency fund for un­fore­seen ex­penses such as med­i­cal or car/ home re­pairs is al­ways good to have so that it does not dis­rupt the bud­get/plan.

If you have a mort­gage, mak­ing over pay­ments into your off­set or re­draw ac­count al­lows you to get ahead and still have ac­cess to the cash when re­quired. Small changes like pay­ing fort­nightly as op­posed to monthly can help you over­pay on your

home loan too. If you do not have a mort­gage then I would rec­om­mend sav­ing into a sav­ings ac­count sep­a­rate to your ev­ery­day ac­count – this way you are less likely to dip in.

From a longer-term per­spec­tive, check­ing your su­per­an­nu­a­tion and your in­surances to make sure they suit your goals/re­quire­ments is ad­vis­able. If you haven’t al­ready, or­gan­is­ing or re­view­ing a will is worth look­ing into.

As al­ways, I would al­ways rec­om­mend talk­ing to a fi­nance pro­fes­sional, i.e. a mort­gage bro­ker, fi­nan­cial plan­ner, ac­coun­tant in or­der to help make this plan work. These pro­fes­sion­als have the knowl­edge and ex­per­tise in as­sist­ing you to save money on your big­gest and most im­por­tant fi­nan­cial com­mit­ments as cheap isn’t al­ways the best.

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