ASIC’ MoneySmart program is encouraging people to make a positive start to 2015 by taking steps to set and achieve their financial goals.
‘To make 2015 your best year yet for your personal finances, make some financial resolutions for the New Year and reap the benefits over the course of the next 12 months and beyond,’ Miles Larbey, Senior Executive Leader for Financial Literacy, said.
‘Whatever your age, income or personal circumstances, make 2015 your best year yet by taking charge of your money, making a financial plan and tracking your progress.’
Here are ASIC’s MoneySmart tips for New Year financial resolutions.
1. Set a financial goal
ASIC has developed a free mobile app, TrackMyGoals to help you set, track and reach your financial goals.
‘TrackMyGOALS is the newest addition to the suite of online personal finance tools and calculators available from ASIC. It’s easily downloadable from the App Store or Google Play,’ Mr Larbey said.
2. Take stock of your net worth and consider diversification
Most Australians have money invested in one or more super funds, and may also own shares or property.
‘Use ASIC’s MoneySmart net worth calculator to take stock of your financial situation. By working out what you own and what you owe, you can work out how much you can afford to put towards a saving or investment plan.’
‘You should also consider diversification, which means spreading your investments so you don’t have all your eggs in the one basket. The aim of diversification is to reduce the risk of losing money, so that if one investment produces poor results or is completely wiped out, you still have other investments that may offset the loss or at least save you from losing everything.’
‘ASIC’s MoneySmart website has information on how to diversify your portfolio and other golden rules for investing.’
3. Control your debts
‘Getting your debts, such as credit cards, under control is a major step to taking charge of your finances and a healthy financial plan.’
‘A debt of $2,000 could take you over 12 years to pay off and cost about $2,150 in interest, if you only pay the minimum repayment.’
‘Use ASIC’s MoneySmart credit card calculator to work out how you get on top of your debts in 2015,’ Mr Larbey said.
4. Get to know your super
‘Get to know your super and join the 36% of Australians who know their superannuation balance, by going to your fund’s website or take some time to go through your annual super statement.’
‘A few simple things can make a big difference to your retirement planning. For example, consider combining multiple super accounts to save fees, making extra contributions and reviewing your investment options,’ Mr Larbey said.
5. Pay extra on your mortgage
About 1 in 5 Australians who save money do so by making extra payments on their mortgage. This strategy can cut years off your loan and save you thousands. For example, a couple with a $400,000 mortgage could save around $50,000 and pay off their debt almost 4 years earlier by contributing $200 extra monthly.
‘The best way to take advantage of making extra repayments on your mortgage is to act early, especially when interest rates are historically low as they are now,’ Mr Larbey said.
Use ASIC’s MoneySmart Mortgage calculator to work out how you could pay off your mortgage sooner.
6. Review your insurance cover
Having the right amount of insurance in place is a critical part of a financial plan, but it pays to shop around and understand exactly what you’re covered for. Make a resolution to review annual insurance policies, such as home or motor, when they come up for renewal in 2015.