At Super-Advice we are about all things financial, but more importantly, helping people understand so they can get ahead financially.
In today’s blog post we share with you some new year steps you can take to set yourself financially free.
Do a budget.
Find out what your income is, what you take home. Find out what your fixed expenses are, what they cost you every week or month, and then you’ll be able to identify your discretionary spending and try to lower it down. Just stop buying stuff for a while. You need to have visibility of how money moves around in your household. Do that, number one.
Save one thousand dollars
I want you to save a thousand dollars.
It’s a starter emergency fund. You’ve done a budget, so you see where the money moves. I want you to dedicate some to a savings account until it fills up to a thousand dollars. That’s your starter emergency fund. You use that if something happens, like your car breaks down or, or something while you’re going through the steps to Financial Freedom.
Change your relationship with debt
I want you to change your relationship with debt.
Debt is what is keeping you down.
You are spending ‘future you’s’ money today! ‘Future you’ does not like that, and is asking you to change.
Use the snowball technique littlest debts to the largest debts, pay all the spare money you can find from your budgeting and pour it on the little debt – while paying the minimum on the other debts..
Then once that little debt’s paid, pay that amount and anything else you can spare on the next debt, and then the next debt, and then the next debt. And you get rid of all your debt!
Leave the mortgage out. If you’ve got one of those, just all of your BNPL (Buy Now Pay Later) Credit cards, personal loans and vehicle loans. Get rid of the lot. All right? You’ll have all of this money as you don’t have to keep giving it away every payday on debt repayments.
Full emergency fund
IF you can save three months worth of your expenses, which you can see from your budget that you did in step one, three months worth of your expenses is your FULL emergency fund.
If you can go to four, five, or six months – legend! you will feel super safe at six, but you’ll feel a lot safer just at three. Have that money there in a savings account.
You’ve now got great visibility of money because you understand it. You’ve got no debt as you dealt with it.
You’ve got a full emergency fund, so if something goes wrong, you’ve got the funding for it. Now, any spare money, you can send it directly to an investment and it starts to compound and starts to grow. So rather than paying debt payments and 10%, you invest your money and make 10%, now compounding is working in your favour!
Pay off your mortgage
The next step if you’ve got a mortgage is once you’ve got some investment put more on your mortgage. It’s debt. Get rid of it faster. Okay? Just put a little bit more on, it’ll save you years. Talk to your banker, talk to your financial adviser. They can even run a calculation to show you.
Pay your children’s education
And then last of all, if you’ve got through all of these steps, you have a lot of money floating around. And if you’ve got kids, our recommendation is you put a little bit of money aside for them to get the best tertiary education they can. You can pay for their tertiary education, or even half of it if you want them to contribute.
And look, then you’ve set not only yourself up, but your kids and nothing feels better than that.
That’s a wrap
They are the steps that we think you should use to change your financial attitude and hum into an awesome 2023 and we wish you the best and come back to us if you’ve got any questions.
If you need any financial help or advice please get in touch with us at Super-Advice.