Home Wealth Personal Finance 6 steps to get financially fit this year

6 steps to get financially fit this year

Hit more than the gym this Summer.

Jack Derwin

Digital Journalist, Your Money

While the number of new gym memberships soars in January, your body might not be the only thing that needs to get in shape.

The start of a new year is a great time to get financially fit, and the reason is simple: your money affects all aspects of your life.

Whether it’s saving for a house or a trip around the world, your financial resolution should be given all the support it deserves.

This is how to achieve your financial goals this year.

1. Write down your goals

By writing down your goals, you have a significantly better chance of achieving them, financial coach Rebecca Pritchard told Your Money Live.

“We want to think about not just things like saving or investing, but what it’s actually going to mean for our lives,” the Wealth Enhancers adviser said.

This means aligning your financial goals with what you want to do more of as well as what you want to avoid.

“If you haven’t done goal setting before, try starting with some basic goals like saving a cash buffer or getting rid of some toxic debt,” she explained.

For those further ahead, Pritchard suggests thinking bigger, whether it’s buying a property, planning a trip overseas or starting a business.

“Think about short, medium, and long-term goals to make sure they’re evenly spread out. The last step is to share it with someone.”

2. Write (or rewrite) your budget

While goals are your financial destinations, you’re going to require the money to fund the journey.

That’s where a budget comes in.

If you’ve already got one, the new year is the time to ask what is and isn’t working.

“Could you save or invest more? Do you need to cut back in some areas or redirect some financial resources?” Pritchard explained.

If you haven’t got one yet, you’ve got no excuse now.

Grab a pen and paper or utilise an online template or application to help you track your income and spending.

3. Demolish your debt

While it can seem daunting, the only way to deal with debts is to tackle them head-on.

“Just like those Christmas kilos, they won’t fall off by accident so we need to have a plan to get rid of them,” Pritchard said.

“To start, we need to write down all our debts… writing down what you owe, what it was for, what is the interest that you’re paying on that debt, and what is the minimum repayment.”

Once you’ve figured this out, you can prioritise in order to pay off the highest interest debt.

“We want to pay the minimum repayment on all but our most expensive debt, which is probably a credit card or a personal loan,” she added.

Once that is paid off, work your way down your list until your debt-free.

4. Automate your cash flow

The ability to automate much of our financial lives means we can reduce our opportunities to fail.

“When it comes to our spending, saving, investment, repayments and living expenses, we want to automate these as much as possible,” Pritchard explained.

By scheduling all these decisions, you don’t give yourself the opportunity to renege on your financial goals.

5. Protect yourself

While a budget is critical for your day-to-day, it’s inevitable that life will throw a few curve balls throughout the year.

“Take some time in January to think about what is important to you and make sure it is protected,” Pritchard said.

“Things like income protection, trauma cover, life insurance and it’s also a good opportunity to make sure you’re getting a good deal on things you use more often like health insurance, car insurance, house and contents [insurance].”

6. Stay the course

More than a few resolutions made in January struggle to see June.

In order to keep yours going, you need to contextualise how your financial goals will improve your life, and not just inflate your bank balance, Pritchard explained.

“If we can really connect it with our goals and our values and why it’s important to us, we’re far more likely to have that healthier and wealthier life on an ongoing basis.”

Watch the interview above for more. 

Plus: Here’s the specific income you need to buy happiness
Plus: The four pillars of retirement happiness
Plus: What happened when these kids took control of the family budget?

Get more news, analysis and insights straight to your inbox!

By clicking subscribe, you accept our privacy policy.