6 achievable New Year resolutions for your finances

Most of us want to put 2020 firmly behind us and look to a better year ahead. Here are six easy new year resolutions to get your finances in order for a happier and more prosperous 2021.

After a year marred by natural disasters, global pandemic and recession, it’s more important than ever to get our finances back under our control in the new year. But doing so doesn’t have to be hard work!

These six achievable resolutions are a great – and easy – place to start:

1. Pay down debts

Who doesn’t start every new year aiming to tackle their debts? But with interest rates now at record lows, 2021 offers a chance to do so like never before.

Loans, mortgages and, to a lesser extends, credit and store cards now have lower rates. If you maintain repayments above the bare minimum each month, you’ll chip away at the principle debt much faster.

Also consider consolidating more expensive debts (that is, those with higher interest rates) into one with a lower rate, such as your mortgage. You’ll pay less interest overall, plus it’s easier to keep track of where your money is going.

2. Review your insurances

It’s always good to review your insurances each year. Sadly, loyalty doesn’t mean much to insurers, and they often charge existing customers more than new ones.

Don’t blindly pay that annual car, home or pet insurance renewal: shop around for a better deal and ask your insurer to match it, or switch.
Especially in the COVID age, also review other types of insurance: health, life and disability (TPD). If you don’t already have them, should you look at getting cover? If you do, do changed circumstances warrant changing plans?

Remember, though, that if you quit a particular policy, you may not be able to get it back again later. So, get independent advice before making any drastic changes.

3. Family check-in

Take a few minutes to really think about your family’s needs, wants and values – and whether they have changed.

For instance, COVID lockdowns and remote working have seen many people rethink where they live. Some found they need more space. Some found they no longer need a big house with a big mortgage. Others found they no longer need to live in a big city at all.

Consider how 2020 altered your life and what (if any) changes are needed to your living situation. Then devise a plan for making those changes a reality.

4. Check in with your super

COVID has caused mayhem for people and businesses alike. What does this mean for your superannuation?

Some funds were left exposed by the pandemic; some property markets and company shares saw their values wiped out. Others maintained steady growth.

As such, consider whether you’d be better off switching providers, and look at how your money is invested. A few simple tweaks could make a big retirement difference.

5. Build your emergency fund

Your accountant, financial adviser and even your mum have been saying it for years: “put money aside for a rainy day”.

As COVID and the bushfires have shown, things happen – even ones you never thought possible.

2021 is the time to start replenishing those funds you used to cover lost earnings or start building a buffer for the next crisis.

You may even want to aim higher – 3 months’ savings used to be the goal, but perhaps 6 months’ is a safer buffer given the persisting uncertainties.

6. Revisit your spending and investment plan

The previous steps involve changes to your spending and investment plan, so while you’re at it, revisit the rest of that plan too.

What are your goals? Have they changed? Has your health, living close to relatives, or working remotely become more important?

Changed goals generally demand changes to your budget too, so ensure that you and your finances are working towards the same goals!

This article was originally published in WHO magazine