Financial setbacks are often triggered by an unexpected event such as injury, loss of employment, large unplanned expenses, and wrong investment decisions. When financial setbacks accumulate, it can become emotionally overwhelming and highly stressful. It is important to get your finances back on track as quickly as possible. Avoiding the situation will only escalate the problem in the long run.
Tips to get your finances back on track
- Monitor every dollar that comes in and goes out. Knowing your income and expenses will help you track and reduce your spending.
- Reassess your expenses and cut back on discretionary spending.
- Work out a budget and stay committed to it.
- Set SMART (specific, measurable, achievable, relevant, time frame) financial goals.
- Start saving. You can start small and make it automatic through recurring direct bank transfer to an interest paying bank account.
- Save money on common expenses like food and clothing by shopping for specials.
- Shop around for better deals on services like phone and internet. A new service provider often can provide you with a better offer just to sign you up as a new customer.
- If you have a mortgage, you can try to negotiate a lower interest rate or switch to another provider. You can also negotiate a longer loan period to reduce your repayments.
- You can generate quick cash by selling off your unwanted items and decluttering your home.
- Pay off higher interest rate debts as soon as you can. Credit card debts and personal loans attract high interest. Try to pay more than the minimum amount to reduce your debts quickly.
- If you have multiple loans, consolidating your debts could be an option. Rolling multiple debts into one can make it easier to manage and lower your overall interest cost.
- Change your lifestyle habits. Some habits, like smoking, are expensive. Quitting will save you money and improve your health.
- Regularly monitor any automatic direct debit payments you’ve set up. Automatic payments for things like gym memberships, entertainment, and online subscriptions are easily forgotten. Promptly cancel any direct debits for services you are no longer using.
- Protect your income and your family by getting adequate insurances.
Getting your finances back on track requires you to be disciplined with your spending. Having separate accounts for your savings will help. By keeping your savings separate, you are less likely to spend the money.
Continue to invest some time in learning basic finance and money management skills. Being equipped with the knowledge will allow you to make better money decisions in the future.
Don’t ignore your super
Contributing to your superannuation could be the last thing on your mind when you are dealing with a financial setback. However, superannuation is something you must not ignore. Your retirement depends on it. It’s never too early to plan for retirement. Given enough time, even small additional contributions will compound into substantial sums by the time you retire. Be sure to review your superannuation at least once a year to ensure your investment is still aligned to your long-term goals. If you have multiple super accounts, roll them into one and save on fees.
As you regain control of your finances, continue to build your surplus funds and contribute to your superannuation. Avoid taking on new financial responsibilities too quickly. Build a solid buffer first and focus on growing your emergency fund to cover at least 3 months of expenses. Once you are ready, you can look at ways to build and grow your wealth through investing.
It takes effort and commitment to get yourself back on track financially. It is important to seek professional guidance early. The team at Moiler is here to assist. Contact us today for a confidential discussion and let us help you develop a plan to regain your financial stability and freedom.
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This document has been prepared by Moiler Wealth, an Authorised Representative of Count Financial Limited ABN 19 001 974 625; AFSL 227232 (“Count”) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124 and is for general information only. The presentation has been prepared without taking into account your personal objectives, financial situation or needs. You should assess whether the information is appropriate for your needs and consider talking to a Count Authorised Representative before making any investment decision. The relevant PDS should be considered before making a decision about any financial product. The information is provided as an information service only and does not constitute financial product advice and should not be relied upon as financial product advice. 2 December 2019.