11 Popular Financial Goals for the New Year

1. Start a budget

The secret to financial security isn’t making lots of money, but sensibly managing the money you have. A budget is the best way to start doing this, ensuring you know where your money is going and sticking to the plan you lay out for yourself. It can feel intimidating at first if you’ve never budgeted before, but it will undoubtedly help you to cut out overspending and reduce your money worries.

2. Manage your debt

Getting out of debt can seem a long way off if you don’t make plans for how you’re going to become debt-free. There are no shortcuts – it takes both time and sacrifice – but once you do manage to clear your debts completely, it’s a liberating feeling and opens up many more opportunities to help you grow some savings.

3. Start saving regularly

Once you’ve got your debts and spending under control, building your savings is essential. You should aim to save at least 10% of what you earn every month. Again, you may have to make a couple of sacrifices here and there in order to do this, but when you have those savings earning you money in your nest egg, missing the occasional night out or frivolous treat will feel completely worthwhile.

4. Automate your savings and investing

An excellent way to formalise your commitment to saving is to set up an automatic transfer into your savings account on payday. This way, you prioritise saving and if you forget to make the transfer yourself, you won’t find yourself tempted to spend the money.

5. Build an emergency fund

Enough scraping through… the first step towards stabilizing your finances is to build an emergency fund that will keep you away from your credit cards and out of debt should your income be compromised, or you require quick access to capital. A fully-fledged emergency fund should be sufficient to sustain you and your family for at least three months in the event that you cannot work. So, the sooner you set one started, the better.

6. Create Multiple Income Streams

Even if you love your job, creating multiple income streams is a form of income insurance. For that reason alone, it needs to be on your list of good financial goals.

But here are even more reasons:

  • One of those income streams could be the part-time cash flow that enables you to semi-retire at an early age
  • If you want to start your own business – but don’t want to quit your job – starting a side business could be the way to do it
  • The extra cash flow from any additional income stream could be used to help fund your retirement savings
  • It could also be used to help you pay off your debts
  • Several income streams could provide you with an income portfolio, that means that you’re not dependent on a single source of income – ever!

7. Increase your financial knowledge

This can be as simple as finding a book, magazine or reputable website and dedicating a little time each week to increasing your money know-how. Anyone who has financial security hasn’t done it through luck, but through understanding what to do with their money, so the more you learn the more secure your finances are likely to be.

8. Start investing

Making some sound investments is often the crucial step from financial security to prosperity and success. However, you should only invest when you’re ready (i.e. once you’ve achieved the previous four goals). It’s worth getting good independent financial advice as well to ensure you make the right investments for your personal circumstances.

9. Complete an Insurance Check-Up

One important thing to do each year is an insurance check-up. The first part of this makes sure you have adequate insurance coverage. Your situation may have changed over the last year, and so your insurance needs may have changed too. If you got married or had a baby, you should look into adding life insurance. Car and home insurance tend to go up each year even if you do not have any claims. You may be able to find better rates by switching.

10. Update Your Wills and Appoint Enduring Power of Attorneys

Why do we need a will?

People mainly use them to write down family members they want to provide for if they die, and how they want to distribute what they own. Wills also let us specify someone we would like to look after our kids or to leave special gifts and meaningful things to people or organisations we choose. They can include special instructions for a funeral, and they typically name the person who will carry out our wishes. If we don’t have one, or if ours is not valid for some reason, what we would like to happen may not happen in reality. This could put our families into legal and financial difficulties.

What are the two types of enduring power of attorney?

Enduring power of attorney for personal care and welfare: usually a close friend or family member  (there can only be one at a time and it has to be an individual – not a trustee corporation) who makes decisions about your care e.g. selecting a rest home or deciding on medical treatment.

They can’t make decisions about marriage or divorce, refuse standard or life-saving medical treatment, or consent to medical experimentation. This kind of enduring power of attorney comes into effect only when you lose your mental capacity.

Enduring power of attorney for property: you can pick one or more individuals or a trustee corporation to make decisions about how your property and finances should be managed. You can decide whether you want this to come into effect immediately or only when you lose your capacity.

It’s possible to have one person who has enduring power of attorney for your personal care and welfare, and a different person who has enduring power of attorney for your property and finances.

11. Create a 5-year plan

Short-term goals are incredibly important for developing healthy spending and saving habits. However, you also need to focus on the long-term game, especially if you’d like to own property, rather than rent it; buy a nice car, rather than constantly fix the one you have; and become financially free, rather than living in debt. Sit down with your significant other and create a 5-year plan for yourself and/or your family, which should be a patchwork quilt of smaller monthly goals and medium annual goals.