Creating Financial Stability in Uncertain Times

Happy New Year! Do you start the new year eager to set goals and put new habits in place? I know I do. It always feels like a bit of a clean slate to fix anything you weren’t satisfied with the year before. In the current economic climate, helping our clients find greater financial stability is top of our list. So, here are some steps you can take.

When the economic outlook is uncertain, it’s best to focus on what you can control, rather than worrying too much about current market cycles and conditions. The best way to improve your financial outlook long-term is simply to create a plan and stick to it. This can mean going right back to the basics.

First, make a budget: This will help you understand where your money is going and where you can cut back on expenses.

  • Start by listing all of your income sources, such as your salary, any investments, or any other sources of income.
  • Next, make a list of all of your fixed expenses, such as your rent or mortgage payment, car payment, and insurance premiums.
  • Then, make a list of your variable expenses, such as groceries, entertainment, and dining out.
  • Add up all of your income and all of your expenses to see if you are spending more than you are earning.
  • If you are spending more than you are earning, try to find ways to reduce your expenses, such as cutting back on dining out.
  • Once you have a handle on your income and expenses, create a plan to save a portion of your income each month. This can be in a savings account or in an investment account, depending on your goals.
  • Finally, review your budget regularly to make sure you are on track and adjust it as needed.

Save first, spend laterhas long been my mantra. Put aside a portion of your income each month into a savings account. This will help you build an emergency fund and prepare for unexpected expenses.

Spend wisely and look for ways to save money on everyday expenses, such as by shopping around for the best prices on groceries, gasoline, and other household items.

Cut back on unnecessary expenses. For example, consider cancelling subscriptions or memberships that you no longer use or need and finding ways to avoid impulse purchases.

Tips to reduce debt

Try to pay off any high-interest debt, such as credit card debt, as quickly as possible. This will help you save money on interest and improve your financial stability.

Remember though, that there’s ‘good debt’ versus ‘bad debt’. Good debt is debt that is taken on for a specific purpose, such as buying a house or furthering your education. This type of debt is typically considered good because it can help you achieve important financial goals and leads to long-term financial benefits, such as building equity in a home or increasing your earning potential.

Bad debt, on the other hand, is debt you acquire for non-essential purposes, such as buying luxury items or financing a vacation. This type of debt does not provide any long-term financial benefits and can lead to financial difficulties, such as high-interest payments and reduced savings.

Invest wisely

Consider investing in a mix of stocks, bonds, and other assets to help grow your wealth over time. If you're new to investing, it's best to start small and invest in a mix of assets. As you become more experienced, you can gradually increase the amount you invest and consider more advanced investment strategies.

Start by learning about the different types of investments, such as stocks, bonds, and mutual funds, and how they work. You can do this by reading books, articles, and other resources, or by taking classes or courses on investing. We’ve got a range of free videos, eBooks and articles aimed at helping you reach your financial goals.

Review your super strategy

Think about your goals and what you want to achieve with your superannuation. This includes factors such as your retirement age and income goals, as well as any other savings or investments you have. From there, you can consider factors such as your risk tolerance, investment options, and fees and charges associated with your superannuation fund. It can also be helpful to seek advice from a financial adviser or planner who can provide personalised recommendations based on your specific situation.

Seek professional advice: Not sure whether a specific type of debt is good or bad? Wondering if you’ve got the right super strategy in place? Talk to us!

Call anytime on (02) 8268 2900 for an obligation-free chat.

Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Please consider whether the information is appropriate to your circumstance before acting on it and, where appropriate, seek professional advice.