The year has been a tough time for many – physically, socially, and financially. As we lead into a fresh start this 2021, it can help to review your monetary situation and ways to improve it for the months ahead.
Whether it’s growing your savings, paying off bad debts, or splurging on travel for the new year, proper money management is critical to keeping these ventures worthwhile and hassle-free.
SkillsTalk explore four financial goals to kick off your 2021, and how they offer a boost of financial stability.
4 financial goals to achieve in the new year
- Review your 2020 financial history.
- Set and prioritise your budgets.
- Start preparing for tax season.
- If you can, consider investing.
1. Review your 2020 financial history.
Your first step to a cleaner financial slate is to assess your spending activities, subscriptions, and accounts in the past year.
Are you still paying for services you barely use – or have forgotten altogether? These could include forms of entertainment (i.e. streaming platforms and magazine subscriptions), premium memberships to clubs and organisations, or paid software simply cluttering your devices. Pinpoint these money sinks in your financial history and start removing them as necessary.
It also helps to review your credit score, factors that have affected it over the year, and ways to improve it. This would be a good time to pay off those bad debts, and if needed, consider a consolidation loan to condense multiple debt payments into a larger, single one.
Lastly, take the time to review your superannuation. Ensure all your funds are consolidated into one, helping you save on fund fees and earn more interest. It may also be worth reviewing your current super fund fees, and if switching to competitors will serve your budget better.
2. Set and prioritise your budgets.
Next, set aside the time to craft reasonable budgets – and prioritise them as necessary. This requires separating necessities from luxury goals or desires. The process helps you better track your spending activities, allowing you to be more financially in control.
In 2018, research showed that lacking this monetary awareness found 59% of Australians suffering high stress, lack of sleep, and constant worrying over their financial future. With organised budgets, however, you’ll know exactly where your money goes; including areas that could use less spending, and those that could use more investment.
It’s also a good idea to set short-term, mid-term, and long-term financial goals, and setting target dates for each – helping you allocate your savings as required. A long-term personal savings goal, with which individuals immediately place 10% of their paycheck, is often advised; as this provides you with an emergency fund in times of critical need.
3. Start preparing for tax season.
While hardly a fun task for many, tending to your taxes early can save you a headache or two come tax season.
Experts recommend setting reminders on all important tax deadlines, and accounting for any travels before the new income year. In these cases, the ATO allows individuals to lodge their tax return early.
Lodgement due dates are also prone to yearly change, so keeping tabs on these will ensure you don’t miss a deadline.
Of course, keep all essential documents handy and organised. These include the basics, such as your Medicare and/or private health insurance information, personal identification, and banking details. Those managing a business or multiple sources of income (i.e. freelancers), must also have the appropriate financial information (i.e. revenue, tax write-offs) on hand.
Know what counts as a “work-related expenses” to help you make the appropriate tax-deductible claims on your tax return. These typically include phone bills for office calls, professional development courses, and devices required to work from home, though it’s best to double-check the ATO website for any updates.
Finally, make use of digital software to help you organise receipts and crucial tax information. This could be as simple as entering data into a spreadsheet, or an online app such as QuickBooks to manage your business income. Either way, you’ll save yourself the hassle of digging through unorganised piles of receipts and invoices.
4. If you can, consider investing.
Lastly, if you have enough savings to spare, it may be a good idea to look into investment options.
When done right, these expenses are ideal opportunities for extra cash flow. Beginners in the area can start with micro-investment apps: apps that round up your purchases and save your spare change in an investment fund. The process requires no deposit and is easy to set up, helping you build a substantial nest egg over time.
Recommended micro-investment apps in Australia include First Step, Raiz, and Spaceship Voyager.
Those seeking larger, more ambitious returns can also try their luck in the stock or property market. These require larger investment amounts, however, with lowest prices starting at $1,000 AUD.
However, it’s important to stay wary of scams and opportunities that seem “too good to be true”. Be sure to do your research, weigh out the risks, and consider other options before diving into a new investment.
Consider investing in your education
Did you know that upskilling is one of the best ways to help you improve your financial situation? By equipping yourself with the right knowledge and skills, you could be moving up the career ladder in no time.
Upskilled has a variety of online courses in business, community services and information technology. These courses provide flexibility as you can access your studies anytime, anywhere.
Want to improve your career prospects in the new year?
Chat to one of our education consultants and enquire how studying a course can elevate your professional life.