It’s commonplace to spring-clean your house, update your closet and restyle your hair, but have you given much thought to refreshing your finances?
The common saying is that you should make your money work for you, so how often do you review your spending, saving and investing habits? Your finances are something you should be continually monitoring, especially if you are working on a sole income while raising children. If you frequent this site or have found yourself here looking for information, you may already be very financially conscious or aspire to be. However, here are a few things to consider to ensure that your financial wellbeing stays nurtured.
Figure out areas that require improvement
Before you embark on your possible financial reset, it may be best to start with some self-reflection. Do you have lots of little debts floating around? Do you find it challenging to put some money aside? Maybe you like shopping a little too much?
By first identifying these habits or pitfalls, you can create SMART goals. SMART, in case you haven’t heard the term, is an acronym for specific, measurable, assignable, realistic, and time-related. So, for example, you identify that you are not putting enough of your paycheck into savings. Therefore you might say that you want to put away $100 out of each paycheck for four months. This is just a general figure; obviously, it would depend on your income and expenses.
Setting a goal, such as the one above, is specific, you’ve said exactly what you are going to do. If you have a fortnightly income, it is measurable as by the end of the four months you should have $800. Hopefully, this is a viable figure based on your income, which should make it achievable and realistic. Finally, you have set a timeline of four months. Some simple reflection and necessary planning such as this will make it easy to sort out your neglected habits and set goals to improve them.
Should you roll your debts?
If you aren’t sure what you should be reflecting on, debt is a crucial aspect of finance that will always require your attention. Most people are in debt of some description, whether it be a mortgage or student loans; however, let’s address smaller debt. As debt can hurt your credit score, you mustn’t let it get out of hand.
This is where the opportunity to roll your debt comes into being. Most western countries offer this form of debt consolidation to their population. Typically, regardless of your nationality, if you are finding it challenging to manage multiple debts, you can combine them to make one monthly payment. For example, if you have various loan payments and credit card bills, and you would like to be more on top of them, this may be a viable course of action. Keep in mind that the are risks to rolling debt, and you should always get in contact with a financial advisor first before making the decision.
Do you have an adequate emergency fund?
The next area to consider is the state of your emergency fund, provided you have one. If you don’t, it may be time to get on it. An emergency fund is an account that you, ideally, can’t regularly access. Whilst most people have insurance to some extent, emergency funds may get you out of a sticky situation without having to rely solely on your insurance.
The best way to go about an emergency fund is to establish a separate account from your everyday accounts and then organise automatic transfers. By doing this, you can decide how much you would like to transfer (it really doesn’t have to be much) and how often you would like this done. Maybe you elect to have $20 transferred weekly into this account. This will build up quickly, and by the time a year has passed, you will have 1k in your emergency fund without lifting a finger. Then if you ever have a busted pipe, a popped tire, or a terrible landlord, you’ll have peace of mind that there is spare cash available.
Are you getting the best deals from your providers?
For most of the bills charged to you, there are usually ways to ensure that you are getting the best available deals. This goes for your energy bills, your phone bills, your credit card bills, and your bank fees.
Are you getting the best interest rates on your savings account? Are you on the highest mobile plan on that market? Asking questions like these allows you to do the right research to fill in these potential money pits. Whilst swapping plans may take up a good chunk of your day, saving a few extra dollars will always be worth it in the long run. Loose change amounts quickly, a couple of dollars off your energy plan is a couple of dollars in your emergency fund, or put towards a holiday.
Create a personalised budget
If you’re operating on a sole income, chances are you already have a budget of some description. Refreshing your financial wellbeing is strongly influence by revitalising your weekly/monthly budget. There are three categories you should evaluate when building or refining your budget – incoming, outgoing, and the remainder. If you’re struggling to find the cash to create some memories, and take your child/ren out and about, budgeting is an excellent way to figure out if you’re overspending in certain areas.
If you don’t have a budget at all, start by subtracting the vital costs of the bills from your monthly income. Whatever remains is what you should be dividing up into savings, existing debts, or your social life.
Consider giving yourself a fortnightly grocery budget, try to limit what you spend on takeout or dining out. If your child/ren need certain things for school, try and cater for those kinds of purchases also. Same goes if you are anticipating a need for future orthodontist work, a bit of forward-thinking will always be your ally.
Seek financial help if you require it
At the end of the day, if you are feeling overwhelmed or don’t know where to start there is absolutely nothing wrong with asking for help. Even if you feel capable of completing this reset on your own, sometimes a second opinion can highlight what you’re missing.
If you are struggling to make repayments, seek government assistance if it is available to you, or talk to a professional who can create a plan of action. Some may argue that you can’t have mental wellness without financial wellness, so, if there’s a finance-related issue in your life, it’s best to do whatever you can to improve this.
So there you have it, a few key areas to consider when assessing your financial wellness. Keep up to date with where your money goes and whether you are paying more than you should be. Managing a household on your own will always have its difficulties; hopefully, this article will alert you to some ideas that could make life easier. Just remember to conduct some further research on the discussed topics and gain a strong understanding of what will and won’t work for you.
