It’s that time of year once again! With 2024 upon us, many are set to turn over a fresh page and set themselves some New Years resolutions to improve our lives. While goals like fitness and travel are always popular, why not make this the year you transform your financial future?
At Aspire2 Wealth Advisers, we’re here to guide you with some expert personal financial planning advice to help you explore how to set money goals, some tips for saving money, and much more!
Create a Starting Point with Your Net Worth
Before you can embark on any personal financial planning journey, you need to know where you’re starting from by calculating your current net worth.
Don’t fall into the trap of comparing your final figures to anyone else in an attempt to assess ‘status’ or achievement. Your net worth is simply a snapshot of your financial health. It’s the sum of all your assets (what you own) minus your liabilities (what you owe), setting a starting benchmark for setting realistic and achievable money goals.
Calculating Your Net Worth
- Begin by listing your assets – bank account balances, investments, property values, and any other items of value like cars or art.
- Next, list your liabilities – loans, credit card debts, mortgages, and any other debts.
- Subtract your liabilities from your assets
- Voilà — you have your net worth!
Don’t be discouraged if the number isn’t what you expected. Whether positive or negative, it’s your starting point towards better financial health.
Using Your Net Worth as a Guide
Your net worth provides a clear picture of your financial status and helps tailor your New Years resolutions. For instance, if you have a high amount of debt, your goal might be to simply reduce it (or remove it altogether). On the other hand, if you have a positive net worth, perhaps you’ll focus on growing your assets through savvy investments with professional advice. Remember, personal financial planning is not a one-size-fits-all; it’s deeply personal and unique to each individual.
Elevate Your Financial Literacy to Learn How to Set Money Goals
Financial literacy is the cornerstone of sound personal financial planning. It involves understanding how money works, how to manage it, and how to make it grow, ensuring you are better equipped to make informed decisions about your money.
Tips for Enhancing Financial Knowledge
- Read Financial Books and Articles: Immerse yourself in literature covering various aspects of financial planning. From understanding the basics of budgeting, to tips for saving money, to exploring complex investment strategies, there’s a wealth of knowledge available.
- Attend Workshops and Seminars: Keep an eye out for financial planning workshops and seminars. These sessions can provide tips for saving money and insights into current economic trends.
- Leverage Online Resources: The internet is teeming with resources from reputable sources. Follow financial blogs, watch educational videos, and even take online courses to deepen your understanding.
- Consult with Financial Advisers: Sometimes, personalised advice is what you need. Financial advisers can provide tailored financial planning advice to help you set realistic and achievable money goals.
How to Set SMART Money Goals as Your New Years Resolution
Once you become more familiar with your financial position and improve your understanding of this space, you can use this information to start getting an idea of what you want to achieve. When you set your money goals, they should be Specific, Measurable, Achievable, Relevant, and Time-bound (SMART).
For example, rather than just aiming to ‘save more money’, a SMART goal would be ‘to save $5,000 by December for an emergency fund’. This goal is clear: you can measure your progress, it’s attainable, relevant to your financial health, and has a deadline.
BOOK YOUR NO-OBLIGATION CONSULTATION TO LEARN MORE
Common New Years Resolutions Related to Personal Financial Planning
Creating a financial roadmap is a pivotal step in achieving your financial aspirations as part of your New Years Resolution. While there could be any number of goals, here are some common picks:
Review Your Schedule for Income & Expenses
Begin by thoroughly reviewing your income and expenses to better understand your spending and earning habits. We’re not just talking about glancing at your bank statements here, but really delving into what you earn versus what you spend (and where there are concerning points). Track every source of income, whether it’s your salary, rental income, dividends, or any side hustles. Then, list all your expenses, categorising them to understand where your money goes each month.
Is your current setup going to help you achieve your goals? Such a comprehensive view is crucial for effective personal financial planning.
Develop a Budget
Once you understand your income and expenses, you can work to create a budget as a New Years resolution. It will be your financial blueprint, guiding you on how to allocate your income to cover expenses, save money, and invest. Remember to include categories for savings and investments in your budget. Regular reviews and adjustments to your budget will ensure you stay on track with your other financial goals.
Reduce Expensive Outlays on Discretionary Items
Discretionary spending often goes unnoticed but can significantly impact your financial health. Tips for saving money include cutting back on non-essential expenses like dining out, expensive hobbies, or luxury purchases, especially amid a cost-of-living crisis. By being mindful of these expenses, you can free up more money for your savings and investment goals.
Paying Off Personal Debt or Refinance High-Interest Loans
Debt is often necessary for us to climb onto the property ladder, finance vehicles, or simply make ends meet with personal loans, but in the long term, it can be a major obstacle to achieving real financial freedom. Focus on paying off high-interest debts as a priority. Consider refinancing options for loans to secure lower interest rates, reduce the overall burden, or even consolidate the debt to make repayments more manageable.
Shop Around for Insurance
While perhaps not as exciting as other points on this list, insurance is a vital part of financial planning, and it doesn’t have to be so expensive. Premiums may seem like they’re rising every year, but when you shop around for the best deals and coverage that suits your needs, you might stumble across a range of promotions and extra features to secure your business. Regularly reviewing your insurance policies can save you money without compromising on coverage.
Building an Emergency Fund
An emergency fund is a financial safety net designed to cover unexpected expenses like medical emergencies or job loss. Aim to save enough to cover at least three to six months’ worth of living expenses, and ensure the fund is always easily accessible and separate from your investment accounts (you don’t want to incur a taxable event or a loss on investments because you’re suddenly forced to sell).
Invest Where Possible
Getting your money to work for you is a powerful tool for wealth creation. Once your debts are under control and you have a stable emergency fund, consider investing in stocks, bonds, mutual funds, or real estate. Tailor your investments to your risk tolerance and long-term goals. If you’re new to investing, seeking financial planning advice can be particularly beneficial.
Organise Your Estate
Estate planning is an often overlooked aspect of personal financial planning. It involves organising your assets to ensure they are distributed according to your wishes upon your passing. This includes creating or updating your will, setting up trusts, and making arrangements for taxes and health care directives.
Speak with a Financial Adviser to Learn More About How to Set Money Goals in 2024
While the above steps provide a solid foundation, speaking with a financial advisor can offer personalised and professional financial planning advice. A financial advisor can help refine your goals, suggest strategies to optimise your finances, and provide ongoing support and guidance. Whether you’re just starting out or looking to refine your existing financial plan, a professional can make all the difference in your journey towards financial success.
Contact our experts at Aspire2 Wealth Advisers today for SMSF in Perth.
This content contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. If you decide to purchase or vary a financial product, your financial adviser (Aspire2 Wealth Advisers, 08 9322 7028), and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Please contact us if you want more information.
