For many, the start of a New Year brings a time for reflection on what has been, what is now and what will be. A number of other things may follow and more often than not, it includes penning down resolutions for the year ahead. These can be wide and varied with one of the common themes being centred around finances. Examples of financial goals include but aren’t limited to making a budget, saving, paying off debt, investing and so on and so forth.
We are now just about halfway through the year which brings with it a good time to take stock of how things are going with the goals. Unfortunately, more often than not, it doesn’t take long before plans that are set at the start of the year become pipe dreams.
Where do you currently sit as far as the financial goals you had laid out for the year are concerned?
If things aren’t quite where you would have wanted them to be or you completely fell off the wagon, there is no time better than the present to reset your financial goals.
Here are goals to consider (from Chime) when setting out your plans:
Save 10%
A lot of literature out there says you should save at least 10% of your income. Depending on your circumstances, this may or may not be possible. If 10% is a bit of a stretch, put aside whatever you can and with the passage of time, work towards increasing the amount. If you can afford to put aside more than 10%, then go ahead and do that.
Set up automatic transfers (so that you essential set and forget) to a savings account and leave it to grow.
Reduce debt
If you have debt, make a plan to pay it off as quickly as you can. Interest is a killer and the longer you are in debt, the more interest you will be paying thus increasing the cost of the debt.
Take a look at your spending habits, highlight leakage spending, plug those leaks and divert that money towards paying down balances.
Increase credit score
Here is New Zealand, credit scores aren’t something that people talk about too much because there really isn’t a national credit score database. As at the writing of this post, credit reference agency, Credit Simple is the only company that provides credit scores.
Your credit score is based on credit history. Your credit history includes a range of credit transactions such as credit cards, mobile phone contracts, hire purchase agreements, home loans and so on and so forth. It essentially looks at your history of repaying debt.
Having and maintaining a good credit score is a good idea as it will keep lenders happy and go well in your favour if and when you have to apply for some form of credit.
To keep up your scores, pay bills on time!
Save for retirement
Kiwisaver, New Zealand’s version of the US 401(k), is a voluntary work-based saving initiative. It is designed for you to maintain a regular saving pattern towards your retirement. Contributions are taken straight out of your pay at a rate (that you choose) of either 3%, 4%, 6%, 8% or 10%. To add to that, employers (in most instances) have to make compulsory contributions equal to 3% of your pay.
Over time, this all adds up to a decent amount of money that will hopefully see you retiring comfortably.
If you are currently contributing towards your retirement, have you considered contributing a little bit more?
Invest
Depending on your personal circumstances and risk profile, investing is something you may want to consider. Investing puts your money to work and could see you earning good returns. But, this does come with it risks as markets go up and down like a yo-yo. There is no telling how much your investment will be down the line but the hope is that it will be on the up.
Investing is a long term game and if you are going to get into it, you should not only be prepared to slug it out, make sure to educate yourself as much as you can about investing (enrol in an investing course on Udemy – get up to 95% off).
Are you on track to meeting your financial goals?
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