Well, 2017 may not quite be over, but as you start getting ready to taste that turkey and pull those crackers, the Christmas lull is definitely a good time to take stock of your personal finances and make some plans, changes and resolutions for the looming year.
Here are some things to consider to get your financial house in order before 2018 starts.
Although it’s not the be-all and end-all, how much you actually have in the bank right now is an important measure of how things are going – and an important stash for a rainy day. Ideally, this emergency fund has 3 months’ worth of your living expenses. Perhaps more importantly, how your savings position has changed over the past 12 months can be very telling.
How much were you able to save? If you just broke even or you’re worried about your current level of savings, perhaps it’s time to think about allocating at least 10% of what you earn to a fixed savings plan.
If you have had a good year in terms of savings, pat yourself on the back – and consider putting more of it to work in the form of investments to grow your savings. If you already have an investment portfolio, this is a good time to take stock and asses whether the portfolio is right in terms of your goals.
Have your short and long-term investing goals changed, and if so, do you need to reconsider your portfolio? While the key to smart investing is to choose wisely from the word go and then let it be, perhaps your situation has changed and you need to rev up or wind down the risk a little.
Most of us have debts and loans of some type or another, whether it’s for your house, your car, within your business or your credit cards.
The crucial thing is understanding the difference between good debt and bad debt and focussing on paying down the bad debt as soon as you can.
Are you in a position to rev up either the repayment amounts or the frequency of those repayments? Does it make sense to refinance, get better loan products, switch to either fixed or floating interest, or consolidate debts?
As you’re super busy through the year, it’s easy to forget about your super! Most super plans tick along without us even noticing them, but if you don’t even know what the value of your super is, Christmas is the perfect time to find out.
While you’re looking into your super, think about whether it’s working your money as hard as it possibly can. Are you burning too much of it in fees? If it keeps ticking along at this rate, will you have enough to retire when you want?
Finally, if you had multiple super statements sent to you this year, now is the perfect time to think about consolidating all of those plans. Too many people end up paying too much in fees by having too many super accounts.
Consolidating your super will not only save you in fees but also on paperwork and complexity.
A bit like your super, how you manage all of those insurance policies is also something that can fly under the radar throughout a busy year.
But never forget that insurance is there for a reason – to be a safety net in the event that accidents, illnesses and other unpredictable nastiness strikes just at the wrong moment.
Unfortunately, it’s just a fact that too many Australians find themselves poorly covered when things do go wrong, so now is the perfect time to think about whether your insurance arrangements are ready to cushion the blow.
Most of us Millennials are too busy enjoying life to think about the spectre of death, but it’s quite simply a financial reality that we should give some thought to.
Luckily, getting a functional will in place is neither difficult nor expensive. So as we steadily complicate our financial and personal lives with relationships, children and assets, it’s important that your will is keeping up so that if you go, you don’t leave a big mess behind.
While all those numbers looking healthy are really important, we’ve saved the most crucial reason for your end-of-year financial review until last – your happiness.
So as you look into that paperwork and tap those numbers into your calculator at Christmas, ask yourself this: are you happy? Never forget that your financial situation isn’t just about your hard-earned money, it’s about setting yourself up so that you can get what you really want out of life.
Are you spending enough time with your family and friends? Did another year zip past without going on that overseas trip? No matter what you’re doing, you should always be striving to be better off and happier, and then ensuring that lines up with your money – whether it means saving more, thinking about changing jobs or working harder to fund a hobby.
At the end of the day, money matters but your happiness matters more – which is why Christmas is the perfect time for a frank and thorough look at your financial situation.
Here at Clover, we’re dedicated to helping Australians like you feel empowered about your money, so take our free financial health check and start getting your life into a better balance today.
Also published on Medium.