Unfortunately, there’s no quick way to quickly improve your financial situation overnight (short of winning the Powerball, that is).
Of course, that doesn’t mean that there’s nothing you can do!
If there was ever a year to start looking for ways to improve your personal finances, it’s this one.
And it doesn’t have to be big, sweeping changes to your budgeting or household spending, either – even the little things can add up over time and help you improve your financial situation.
While they can take some time to kick in, each of these tips can go a long way towards making things look up!
1) Budget, budget, budget
Let’s just say that there’s a reason this is the first piece of advice you’ll find on any personal finance checklist!
While it’s a relatively simple task, it’s one that can make a world of difference to your personal finances, helping you control your spending and reduce unnecessary costs
A good budget can help you:
- Reign in your spending
- Adjust your finances on the fly
- Save money
It starts by looking at your spending. Once you have a good idea of your average spending every week, month or quarter, you can figure out how much you can spend both overall and for individual expenses.
And while we’re on the topic, it’s important that you either commit your allocated spending limits to memory or keep a tally on your phone – that way, you can make sure that you’re within budget, and that you aren’t overspending.
2) Focus on paying off debt
If you ask our personal accountants, debt isn’t an inherently bad thing… provided that you keep it under control, that is. After all, few of us have enough cash lying around to buy a house outright!
Of course, this comes with an asterisk: you need to keep your debt to manageable levels.
This isn’t to say that you can’t take out a loan or buy things on credit – what it does mean however is that you should make sure you only take on an amount of debt you’re confident that you can repay on time.
Be sure to check how much of your monthly budget you can comfortably spare for debt, and make sure your repayments don’t exceed this amount.
What’s more, it’s also important that you focus on paying off any loans or purchases made with credit as quickly as you can in order to avoid late fees and interest.
It’s a simple thing, and it can mean that some purchases will need to wait until later – however, it can make a big difference.
3) Build an emergency fund
Life has a habit of throwing financial curveballs our way.
From an unexpected car problem, to a major plumbing emergency, to a health issue that neither medicare or your private health insurance policy covers, life’s unexpected expenses can change your plans and throw your personal finances out.
Without an emergency fund, you might have to cut costs or cancel things that you were looking forward to while your finances recover.
While it won’t prevent these unexpected expenses, a rainy day fund can help you get through these emergencies without negatively impacting the rest of your finances too badly.
And the best part is, it doesn’t need to involve making huge sacrifices either!
While it’s ideal to start setting money aside early, building your emergency fund can be as simple as setting aside $10 a week and letting that slowly build up over the months and years.
The key is consistency!
4) Don’t start a self-managed super fund unless it’s the best option for you
Most of the people who ask our personal accountants in Melbourne how they can improve their financial situation tend to be going through tough times because of something out of their control like their small business failing.
However, not all of them are – in fact, a lot of them are here because they made financial choices that aren’t right for their circumstances.
One of the biggest ones? Starting up a self-managed superannuation fund.
There are many reasons to go for an SMSF over a retail or industry fund: greater control, the ability to pool funds, tax reasons… the list goes on and on.
We’d just like to point out however that it isn’t always the best bet.
According to ASIC, SMSFs tend to be better for individuals with larger super balances – on average, funds with less than $500,000 tend to perform worse than APRA-regulated funds.
This isn’t meant to imply that SMSFs are inherently worse – what it does suggest however is that choosing to self-manage isn’t always the best choice. It all depends on your circumstances.
(And don’t forget the amount of work it can take to administer an SMSF – luckily, that’s something our SMSF accountants can help you out with!)
5) Don’t play the blame game
At the risk of sounding unnecessarily “life coach-ey” or “motivational speaker-ey”, it’s important that you keep your attention anchored in the present, and that you don’t spend too much time assigning blame.
That means not:
- Dwelling on bad financial choices
- Focusing on what has gone wrong
- Thinking about “what could have been”
As with any major undertaking, keeping the right attitude can help you get to your goal.
We know, it’s easier said than done – think of it this way, however. In many cases, improving your financial situation can take months of work, often without the sorts of big, exciting turnarounds to keep you motivated.
Think of it like losing weight – since it’s a slow process, the right mindset is key in keeping you on-track, even when it seems like you’re not getting anywhere.
6) Seek out professional help (if you can afford it, of course!)
While it might seem a little bit extravagant, if you have the means, a personal accountant in Melbourne can be a huge help in improving your financial situation.
Our accountants provide a broad range of proactive and reactive services, allowing us meet the challenges you’re facing head-on and with
It all starts by building an understanding of what your financial goals are. Do you want to retire early? Is your priority getting out from between the metaphorical rock and hard place? Or do you simply want to build a system that generates passive income?
Whatever it is, you’ll need a stronger financial position than you currently have, as well as professional help to get there.
Wealth planning requires an in-depth knowledge of Australia’s tax system as well as the skill needed to successfully crunch the numbers and create a path towards a better financial situation – things that not everyone has.
Whether you need help coming out of a financial hole or you want a professional’s help building your wealth, you need a personal accountant on your side!
Improve your financial situation and be where you want to be
Our personal accountants are here to help you prosper
Since 1966, we’ve been helping individuals all over Melbourne get where they want to be.
And you can be one of them.
Our team is committed to providing people-first accounting. You’re more than just a number – you have dreams, a vision and goals, and we’re here to help you get to that point.
All the work we do is in support of helping you achieve your goals, whatever they might be.