For many, the start of a new year is about setting goals and good intentions for the next twelve months, and getting your finances in better order is often a part of this.
When it comes to finances, experts say the start of the new year is the perfect opportunity to take some time to reflect on your financial priorities.
Financial advisor and ProSolution Private Client director Stuart Wemyss says that while the prospect of getting your finances in order can seem like a big task, it essentially comes down to “trying to bite the bullet” in a logical and pragmatic approach.
“It’s probably like any change in life. Rather than aiming for perfection all at once, I think it’s really just about breaking it down into small bite-sized pieces and hoping for marginal improvements,” he advises.
“If I was in a situation where my finances were in disarray and I felt like I didn’t have a lot of excess cash flow, I just try to identify the three most important things I could do to improve that.”
For example, he says this could include getting a better job or retraining to earn a higher income, or if you have a lot of credit card debt and the interest you’re paying on it is really draining cash flow, just focus on paying that off.
“A common complaint or observation from people is: ‘I don’t seem to have any surplus (cash), but I don’t know where it’s going, and I’m not living an extravagant lifestyle.’
‘The answer is usually that money leaks every month in probably a hundred different transactions, which add nothing to your standard of living. If you didn’t spend money there you wouldn’t even notice.
“A simple solution is to transfer a fixed amount every week, fortnight or month to a separate account for ‘discretionary spending’.
“Then you can keep an eye on your expenses immediately; the account balance tells you everything you need to know.”
Analyze your transactions
New South Wales-based Mortgage Choice broker Kelly Carter says a good tip for cleaning up your bank accounts is to download more than six months’ worth of statements and see where your money is being spent.
By seeing where you can make changes and cut back on certain additional expenses, you can consider setting up an emergency fund as part of your 2026 financial goals, she says.
“So think about the things you want to achieve – they could be holidays or renovations, or putting some money aside for your children’s education,” she says.
“Work out what needs to be done, but maybe think longer term – maybe out to the next five years.”
Hire an ‘accountability buddy’
Ms. Carter says: Find an “accountability buddy”—a friend, your partner, or your parents, or someone you can check in with, who will keep your financial resolutions on track by holding you accountable.
![](data:image/svg+xml,%3Csvg xmlns="http://www.w3.org/2000/svg" viewBox="0 0 800 450"%3E%3C/svg%3E)
“If we have someone who has our back, and we talk about our money and have an open conversation about money at the dinner table in front of your kids, that’s a great way to educate them while also holding you accountable,” she says.
Analyze what you pay for non-discretionary expenses
At least once a year, maybe even twice, Mr Wemyss recommends looking at what you pay for utilities and insurance, and comparing the interest rates on your home loan to see if you’re getting the best value for money.
“At the end of the day, nothing changes whether you pay 5.5% or 6.5%… you no longer get value from a bank or mortgage company,” he says.
“So it’s the same with electricity: power is power? It really just comes down to the price, you don’t have to think about functionality and so on.”
Check the interest rate on your home loan
Loyalty to a lender is expensive, Mr Wemyss says.
“Regularly review your loan, check whether the interest rate is still competitive and restructure if necessary,” he advises. “A small interest rate improvement over decades can significantly shorten the term of the loan.
“And if you did that every year, you would be miles ahead of the average Australian.”
Make additional mortgage payments
If you pay your mortgage monthly, Ms. Carter suggests making extra payments without thinking by looking at your monthly payment and dividing it by four.
Maximize your position with extra mortgage repayments. Photo: Getty
“A lender will give you the minimum monthly repayment required, and if you divide that by four, you’re essentially paying another month’s worth of repayments over an entire year,” she explains.
“But because you pay it weekly and it’s only a little bit extra, you don’t realize that it’s already going out.
“So with a 30-year loan term, that could potentially be reduced to 25 years, which is a large amount of interest that you don’t have to pay back to the bank.”
Ms Carter says it is important to remember that interest is calculated daily but charged monthly.
“If you can make your home loan payments weekly or biweekly, you will have more money on your home loan… so the more you can put down on your home loan early, the better,” she suggests.
Set a mortgage deadline
Ms Carter says that if you have a specific goal, such as paying off your mortgage within 15 years, you can use an online home loan repayment calculator, enter your balance and your interest rate to figure out what the repayment would be, and pay that.
“There is no magic wand to pay off your mortgage faster, other than just making extra payments,” she says.
Pay yourself
The easiest way to improve savings, says Mr Wemyss, is to ‘pay yourself first’.
Try the “pay yourself first” approach. Photo: Getty
“Automate transfers to savings accounts or to your offset account as the income comes in. If the money never makes it into your everyday account, you’re not spending it,” he explains.
“Once you have a clear idea of what you can live on comfortably, you can focus all the surplus on your highest value goals – such as reducing debt, stimulating the super economy or investing.
“Unallocated money is inevitably wasted.”
Be realistic
Mr Wemyss says that when it comes to a big expense, such as booking a holiday, people tend to think very carefully because it is normally expensive, and they want to get the most pleasure and value out of it.
“If we could approach every transaction this way, people would be in a much better position,” he says.
He says being a little more intentional about your spending habits is a good start, and realizing that some weeks will go by a bit, while others will be a little off.
Separate accounts
Ms Carter says having offset accounts – separate transaction accounts from home loans – is great for people who like to have ‘bucket accounts’.
“If you follow the Barefoot Investor, or if you have multiple accounts because you like to see different amounts of money for different purposes… all that money and savings you have there will help lower the interest on your home loan,” she explains.
Ms Carter says if you have separate bank accounts for your partner and a joint home loan, you can also use your savings accounts towards your home loan to reduce the interest on your balance.
Educate yourself
Although people who most need financial advice and help may not be able to pay for a professional, Mr Wemyss says there are a plethora of websites, news articles and blogs that can help.
“I don’t think not knowing what to do is an excuse,” he says.
“Educating yourself is easier than ever these days.”
#year #financial #goals #achieve #realestate.com.au