With less than six weeks to go until the New Year, it’s time to start thinking about finances for 2015.
Craig Keary, AMP Capital Head of Retail and Corporate Business, says health and fitness resolutions are popular as intentions to save more or pay down debt.
While these are all worthy pledges, Keary says he’d like to see people set more specific goals to grow wealth.
“Consider a resolution to contribute more to superannuation or commit to undergoing a New Year health check of your finances to ensure your investments are meeting your needs, you’ve got the best rate on your mortgage and you have enough insurance. Challenge your children to develop good saving patterns in 2015 or resolve to invest some time towards better educating yourself about saving and investing. Above all, setting a clear goal is critical for the success of any resolution and talking about your goal with others can help ensure you will actually follow through on your promise.”
AMP Capital’s top New Year’s resolutions for a wealthy 2015 are:
1. Set goals. The best thing you can do when setting your financial New Year’s resolutions is to start with what you want to achieve by the end of the year. Then adjust your budget or behaviour accordingly in order to meet that goal. For example, your goal may be to go on an overseas trip in a year’s time. Therefore, your action could be to save an extra amount from your budget each week or to make an investment that will give you a level of income during the next 12 months to ensure you have enough money at the end of the period to pay for your holiday.
2. Talk about your goals. Our experience suggests that people who talk about their goals and resolutions are more likely to achieve them. Share your key resolutions or goals with someone you trust and respect and check in with them regularly throughout the year to let them know how you’re going.
3. Don’t ignore your financial health. Many people resolve to run the rule over their health at the start of each year. Do the same over your finances and undergo a financial health check. Review your spending patterns to see where you can save more money; commit to saving a certain amount each month; if you have a term deposit, look other investments such as corporate bonds that might give you a better return while interest rates are low; conversely, check your mortgage rate to make sure you’re getting the best deal; and review your insurance to be confident you and your family have enough cover in case things go wrong. Consider making an appointment with a financial adviser to really put your finances through their paces.
4. Save more in your superannuation. Don’t just commit to saving more for a rainy day. Commit to contributing a little extra to your superannuation in 2015 so you have more money come rain, hail or shine in the years to come. Through the power of compound interest, adding extra dollars to your superannuation now will mean having so much more to fund your lifestyle when you retire. The New Year is also a good opportunity to review your investment options so that you have the appropriate mix of growth and defensive assets in your portfolio for your stage in life and in line with your goals.
5. Challenge your children. If you have children, endeavour to improve their financial literacy and start them on the path of saving early. Encourage them to set their own financial goals and help them map out a plan to reach them, then reward them when they do. After all, the savvier your kids are about money now, the more it will help you down the track.
6. Invest in yourself and read widely. Financial education is becoming more accessible and investing in yourself, even if it’s just making time to learn more, is one of the best ways to help you achieve your financial goals. There is a lot of valuable information available online (often for free) as well as offline for your benefit. So consider adding a few wealth management websites, blogs and books to your holiday reading.
7. Don’t leave it too late. If you have big long-term goals that require a lot of money, don’t wait a couple of years to start working towards them. For example, if you would like to retire at a certain age, your resolutions should include determining how much you need to contribute to superannuation and then understanding what investment strategy you should have in place. Seeking the assistance of a financial adviser may be appropriate.
8. Have fun. It’s not all about saving money now to only spend it when you’re older. Make sure you include some fun or satisfying short-term goals in the mix to reward your good behaviour and keep you motivated to achieve your longer-term goals.
Business Insider Emails & Alerts
Site highlights each day to your inbox.