Whilst business owners need to continually plan and monitor the financial performance of their business, they also need to review their personal finances.
Making and sticking to a few simple financial resolutions will start the New Year on the right foot and help to save money and increase wealth.
Six tips to improve financial health in 2008:
- MAKE A BUDGET
It may seem a daunting task, but having a well-planned budget for the year can be the key to good financial health. Those with a budget, no matter how basic, will have a more disciplined approach than those who do not and are more likely to avoid waste.
The start of the year is an ideal time to work out where your money goes and where savings are possible. It will also help you to plan holidays or other activities for the year ahead.
- REVIEW YOUR PORTFOLIO
It’s a good idea to regularly review the performance of assets including those that super funds invest in and any personal portfolio.
Now may be a good time to change the balance of portfolios particularly in light of the recent swings and roundabouts in the stock market.
- ASSESS SUPER OPTIONS
There are an increased number of opportunities to help get the best possible result from superannuation. Review how much contributions are made and how much can be afforded. A little bit extra now can make a big difference later on.
- MAKE A WILL
With Australians having more savings in superannuation and owning other assets, an up-to-date Will is increasingly important.
- REVIEW DEBT
Consider whether personal debt is “good” or “bad” debt and if bad, take steps to eliminate it. Bad debt is any debt that continually finances lifestyle or consumables and is not repaid promptly, particularly if the interest rate is in double figures such as for credit cards.
Good debt is used to produce income or to accumulate investment assets quicker. Usually such debt has the added benefit of the interest being tax deductible.
A good New Year’s resolution is to get rid of bad credit card debt, ideally by budgeting to repay it as soon as possible.
Avoid adding short-term debt incurred by spending on consumables to a long-term mortgage. Redraws on your mortgage should not be used as a solution to over-spending. Even with good debt, it’s still important to be careful of taking on too much, particularly in the present climate of rising interest rates.
- REVISIT PERSONAL INSURANCE
Make sure you have appropriate life insurance, income protection insurance, and trauma or disability insurance in order to protect your loved ones if anything happens. It is worthwhile reviewing your insurance arrangements every few years to take account of changed circumstances.