Making Change: Fiscal Habits for a New Year
Money rates as one of the highest social concerns in Australia, according to the NAB Biggest Issues Facing Australians report. God promises all through the bible that He will bless His people. There are many examples in Scripture both Old and New Testaments where the promise of blessing is highlighted. In the book of Matthew we are encouraged to “seek first the Kingdom of God”, in 3 John 2 John prays that people will prosper in all things and in the Old Testament there is continual encouragement of blessing God’s chosen people. We are encouraged in Malachi to tithe, give 10%, of our income to God, we are encouraged to test God in this area.
Continual learning and discipline in the area of finance is vital for financial peace of mind and prosperity in the future. Our friends Jeff and Ange Lemin from Aspire Financial Consulting Pty Ltd have put together five positive financial habits with proven long-term benefits you can start applying to your life today:
1. Save first
Most people spend their income and try and save from whatever is left over. Strangely, there never seems to be much left over even if they work overtime or get a pay-rise. There is some truth to the saying “Expenditure rises to meet income”. The only way to make sure saving happens is to do it first. Work out how much you want to save for your longer term goals and put that money aside as soon as you earn it.
2. Out of sight, out of mind
The next question is where do you put the money you are saving? If you are trying to save money on your debit card or in your wallet/purse, it probably won’t work. It’s too easy to dip into. The best way is to put your savings somewhere you can’t see or access it easily. Extra payments on a mortgage or personal loan (that you can still redraw if you had no other choice or when your goal is reached), or in a bank account with a separate bank are good options.
3. Plan for your big bills
Once you’ve put money aside for saving, anything left over is there to be spent. But some spending happens day to day whereas other spending like car registration, electricity or rates are very lumpy in nature. If you don’t like starving yourself in the week that the electricity bill is due, make a list of what these bills are and how much they normally cost per year. Add them all up, divide that by 52 (assuming you are paid weekly) and put that much aside each week to cover them when they come around. This could be set aside in a special purpose bills account or some people pay regular instalments in advance to each bill provider to reduce the size of the bill when it comes.
4. Don’t spend what you don’t have
It sounds simple, but with banks and finance companies offering personal loans, credit cards, buy now – pay later plans, it can be very easy to suddenly find yourself in a lot of debt with not much to show for it. If you can’t afford something with the income you have now, chances are you are going to be even less able to afford things in the future with extra repayments from loans and credit cards lumped on top. If you want something badly enough, make it a saving goal and buy it when you can afford it. You’ll value what you bought all the more because of it.
5. Use windfalls wisely
From time to time, we might get a windfall. This could be a tax refund, an inheritance, a bonus from work or even a lotto win. Whilst it might pay for a fun weekend away, once that weekend is over there’s not much to show for it. Using it to pay off a credit card or personal loan or make an extra mortgage payment can mean being debt-free that much sooner which in the long run will free you up to do a lot more.
by Jeff Lemin
ASPIRE FINANCIAL CONSULTING PTY LTD
Currently running Aspire Financial Consulting Pty Ltd, Jeff has placed among the top 10 financial advisers in Australia and top 5 Aspire Financial Consulting (by AFR Smart Investor Magazine.) If you are looking for professional advice in this area, make an appointment with the team at Aspire who can help you with your financial future.