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Top 10 ways to transform your finances in 2020

7 February 2020

Welcome to 2020

One of the most common New Year’s resolutions made every year is to save more money – sound familiar? If you’re getting a sense of déjà vu you’re not alone, but if you’ve found your resolutions have once again fallen by the wayside come February, then its likely time for something to change.

To help you out, we’ve assembled a list of top tips that will kick-start your financial planning and help turn your financial life around for 2020 and beyond *:

Calculate your net worth

1) Calculate your net worth

It’s hard to know where you’re going if you don’t know where you’re starting out from. Consequently, one of the first things you should do is calculate your net worth. Your net worth is a useful snapshot of your current financial situation and you can use it to determine what actions you need take in order to reach your goals.

Keep track of your expenses

2) Keep track of your expenses

If you don’t know where your money is going you won’t know what habits you need to change to make your money work for you. Keep track of your expenses for a period of at least 3 months (though preferably longer) and this will help you to pinpoint your bad habits and cut unnecessary spending.

Create a budget and stick to it

3) Create a budget and stick to it

Once you’ve established your financial goals, you should create a budget to make them happen. Monitoring your expenses will lend you a broad overview of your spending habits. Once you have this, it’s time to assess your outgoings – whether that’s household, commuting, entertainment or childcare – and determine where you can set money aside. With the right budget, you will ensure you always have the funds for the things you need.

Regular savings - make it a habit

4) Regular savings - make it a habit

Saving money is fundamental to sensible financial management, but your savings habits can be more sophisticated than simply having a rainy day fund. Consider optimising your savings plan so that you automatically put money aside every month. There saving plans to complement a range of goals; for example, RL360’s Regular Savings Plan is a long-term plan, tailored to those who want to save for retirement or for their children’s education.** If you do your research well and consult a financial adviser, you will likely find there is a plan well-suited to your needs.

Optimise your debt payment plan

5) Optimise your debt payment plan

It should come as no surprise that paying off debt is one of the most common New Year’s resolutions. Unfortunately, it’s also one of the most broken. To ensure that you stick to this goal, set yourself realistic expectations – for example, if you have a considerable build-up of debt, don’t attempt to pay it all off in one go. Instead, take some time to create a debt payment plan that matches your capabilities. You might have to make some sacrifices, but the effort will pay dividends when you’re no longer saddled with debt.

Improve your financial literacy

6) Improve your financial literacy

Financial literacy is fundamental to your ability to understand financial analysis reports, market trends and to spot investment opportunities. A great place to brush-up on your financial literacy is using our Jargon Buster – a useful tool that’s designed to further your understanding of finance. Financial literacy is truly a life-long investment and if you want to make wiser and more confident financial decisions, you should continually strive to broaden your knowledge.

Schedule meetings with your financial adviser

7) Schedule meetings with your financial adviser

Life happens and it’s possible your financial situation will alter somewhat throughout the coming year. Plan for this and schedule in some meetings with your financial adviser for 2020. These meetings will help streamline your financial goals and help keep you on track to achieve them.

Track your investment portfolio

8) Track your investment portfolio

If you want to optimise your investments, then it’s important to understand what you own and how it’s performing - there are now a wealth of apps and online tracking tools available to assist you. You should monitor your investments to check if they are working for you and, if you find they’re not, this research can prompt you to make changes sooner rather than later.

Diversify your investment portfolio in 2020

9) Diversify your investment portfolio in 2020

It’s commonly said you should never put all of your eggs in one basket. This is sound advice and something you should apply also to your investment strategy. Markets can be volatile and unpredictable, and therefore it’s sensible to spread the risk across different types of investment. A variety of investments could lead to higher returns, but it’s important to consult a financial adviser before making any decisions on your investments.

Save for retirement

10) Save for retirement

Your retirement is now one year closer but are you making sufficient preparations? Studies suggest that a significant number of people are concerned about not having enough money for retirement and if this sounds like you then you need to take action now and increase your savings. Retirement should be something you’re looking forward to, but you’ll need to do the groundwork to ensure you have financial security for when you finally decide to stop working.

*This article is intended for general information purposes only. You must consult your financial adviser before you make any financial decisions.

**Please consult your financial adviser if you are interested in the Regular Savings Plan or any other RL360 products.