Five financial resolutions for 2013

Get your finances on track in 2013, with five New Year’s resolutions you can keep.

The start of a brand new year is a great time to take control of your finances and get back on track. And it doesn’t have to be hard. Here are five simple steps you can take to make a real difference to your finances in 2013 – so you can end the year better-off more secure and more confident than ever before.

1. Say goodbye to debt

Debt can be the single biggest threat to your wealth, especially if you’re borrowing for consumption, not investment.

Start by listing all your debts in two columns, ranked by interest rate. Use one column for personal borrowings, like your credit cards and home mortgage, and the other for investment borrowings, such as investment property loans.

Focus on paying off the debts with the highest interest rates first. Depending on your situation, the interest on your investment loans may be tax deductible, so it can also make sense to pay off personal borrowings before investment borrowings -using the income from your investments to pay off your other debt faster, for example.

2. Set up a savings plan

Lock in a set-and-forget savings plan by automatically transferring cash from your everyday account to a high interest savings account each month, just after you get paid. That way, you can save before you spend, building up a nest egg with less pain – because you don’t miss what you don’t see.

If you’d like the potential for a higher return, consider a regular savings plan. Starting with as little as $1,000 upfront and regular contributions of $100 a month, you can choose from dozens of investment options to create a diversified portfolio, instantly. Find out how much you could save through regular investing.

A financial adviser can help you find the investment options best suited to you.

3. Get your super on track

If you’re like most Australians, you probably have more than one super account. You might even have super you don’t know about. By consolidating your super, you can save on fees and get more control over your retirement savings. It’s also a great opportunity to reconsider your choice of super fund and make sure you’re on track to a financially secure retirement.

Find out more about consolidating your super and choosing a super fund.

4. Protect your family’s financial security

We insure our cars, our homes and our TVs, but surprisingly few Australians adequately insure themselves and their incomes. While no-one likes to think about the prospect of injury or death, it’s worth taking the time to consider how you and your family would cope if you became permanently or temporarily ill or injured, or were no longer there to care for them.

If you think they would struggle to keep up with the mortgage and car payments, bills and everyday expenses, it could be worth reviewing your level of insurance protection.

One option is to take out insurance through your super fund. Your fund’s scale and buying power could help make insurance surprisingly inexpensive. And because you may be able to pay your insurance premiums through your pre-tax super contributions, they can be even more affordable.

5. Talk to an expert

While these resolutions could help you improve your financial situation significantly in just one year, they’re no substitute for a proper financial plan. A financial adviser can help you explore and understand your lifestyle goals, then create a practical plan to help you achieve them. While advice doesn’t come free, it could be the best investment you ever make.

Disclaimer

This document has been prepared by Colonial First State Investments Limited ABN 98 002 348 352, AFS Licence 232468 (Colonial First State) based on its understanding of current regulatory requirements and laws as at 15 January 2013. This document is not personal advice and provides information only. It does not take into account your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making an investment decision.

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