Financial planning tips for young adults
As we return from the holiday season and settle back into our everyday routine, February is the month to plan for the year ahead. Now is the time to set your personal goals. And while many of us focus on health and fitness goals, the start of the year is also a good time to review our financial fitness and goals.
Here are our top financial planning tips to help you get your year off to a roaring start.
Start a savings plan
We all know that we should save a portion of what we earn, however many of us have issues following through with a savings plan. The key is to get into a regular routine that will be easy to maintain. To help you do that, start with a small, but regular amount of money that you can add to consistently while still enjoying a comfortable lifestyle. Having a savings account doesn’t just give you something to fall back on in case of emergency. The impact of compounding interest can help you to build up a nice little nest egg for your future.
Protect your assets
Part of being an adult is the realisation that we are not invincible and that accidents can happen. A complete financial plan should include a plan to protect any assets that you have acquired. The good news is that there are different insurances to help protect the things you treasure in your life. You can choose from home, car, life, bike and even pet insurance. Consider what you need to insure, do your research and compare providers. Then include any premium costs in your budget.
Make a budget
Part of good financial planning involves accountability and curbing your spending. If you need help sticking to a budget there are a number of apps available that allow you to track your spending and manage your finances quickly and easily at the touch of your smartphone. Recording what you spend your money on will show you quickly where you can save money.
Being smarter about your super
All superannuation funds are not created equal. Figure out what you are looking for in a super fund. If you have an existing super fund (you may have one through your employer) call your fund’s Customer Service line to make sure your existing fund meets your needs. Super funds offer different management fees, investment strategies and features so it pays to do your research. Regular contributions to a super fund are another form of saving so make sure these payments are also included in your budget planning.
Pay off your debt
Money you owe on credit cards and personal loans is considered bad debt. These types of loans usually have high interest rates so you end up paying back much more than you originally borrowed. Come up with a realistic repayment plan, pay back more than the minimum monthly payment and remove those debts that aren’t working for you. This will help to free up your money so you can save more or invest in assets that will ultimately build wealth for your future.
Pay your bills on time
Young adults need to consider protecting their credit rating and one of the ways to do that is to pay bills on time. If it makes it easier, add payment due dates to your budget planner or set up automatic transfers between accounts so your bills are always paid on time.
Formalise your financial plan
All these financial tips are designed to help you to complete the final and ultimate task of developing a financial plan. You should sit down and determine your financial goals and create a short term (usually 1 year) plan and a long term plan (typically 5 years). These plans are essentially the blueprint to help you understand where you are and where you want to be. A good plan will guide and keep you on track to make sure you meet your goals.
It is worth taking the time and effort to develop a financial plan. The benefits of having a plan and consistently sticking to it will pay off. Some time spent planning today will set-up your future financial success.