It’s that time of the year again.
Yep. We’re setting goals (or is “aspirations and intentions” more 2019?), writing spreadsheets, becoming geared up and motivated and getting ready to have the best year of our lives.
And while you’re Marie Kondo-ing your wardrobe, fridge, pantry and library, how about a little (or large) clean up of your financial habits? We know women are less likely to take charge of what’s going on fiscally than they are physically (heck, I’d take a workout over working out my super any day), but it is super important to get our money matters in order so when we’re still hitting that spin class well into retirement, we can support ourselves to have the lifestyle we want.
While immediate spending can give you a little hit of dopamine (that’s what makes it so addictive) having a plan, sticking to it and getting financial rewards in the long term can be much more gratifying.
We spoke to Financial Coach Rebecca Pritchard about what steps we can take now, to ensure 2019 becomes the year we take charge of our finances and set ourselves up for years to come.
What habits can we put in place to get our finances in order for 2019?
Start making a conscious effort to look after your financial wellbeing instead of hoping for the best and then being shocked when you have no money.
Create a regular, financial wellbeing check-in, whether it’s weekly, monthly or quarterly, where you commit to checking over your budget. Reviewing your goals and investments is a great place to start. It’s like the financial version of weighing-in or getting some measurements taken. Other critical habits for your financial hygiene hinge on setting up a robust cash flow structure, frequently checking in on your spending (weekly and monthly) and celebrating milestones.
What are the hottest apps to help you pay bills?
You don’t even need to use sexy apps: good old direct debits for everything will take away 95 per cent of the pain. Automation is your secret sauce for success: whether it’s paying bills, saving, making repayments, setting aside money for spending, or investing. Automate it all though online banking.
Women are less likely to take charge of what’s going on fiscally than they are physically…
If you want to track where your money is going, apps likes MoneySoft, PocketBook, Free2Spend and TrackMySpend are very useful.
Other useful apps are Raiz (for some fractional investing), the Australian Taxation Office app – to record your deductible expenses and Finch (for making your social spending with friends easier).
How can we save more this year?
Automate your savings and investments and automate how much you “pay yourself” for your personal spending. And stick to it.
Keep your savings out of reach of your spendings. I’m talking about putting them in an account at a different bank so you can’t stand in a shop and immediately transfer money when you have run low. Putting your savings 24 to 48 hours away through transfers makes a huge difference to your success.
Label your savings so they’re connected with a goal or purpose (it doesn’t have to be a house deposit – it can be a holiday or anything that motivates you) and you will be dramatically less likely to swipe funds from there.
Start investing as a way of building medium and long term savings. Interest rates are terrible at the moment, so if we’re going to get ahead, investing is mandatory. And investing has the added benefit of being harder to access (convert to cash) so it’s far easier to quickly pile up decent sums of money.
What’s this year’s new buzz in the finance world? Is there a shiny financial product we should know about?
This year we’re going to see more momentum build for ethical investing. As exchange traded funds, managed funds and superannuation options get more dollars invested in them and more requests from the market, they become more competitive and more liquid. This is a great result for investors and those seeking to put their money where their mouth is on sustainable investment options.
This year we’re going to see more momentum build for ethical investing.
We’re also going to see growth in niching products. We can see this within the superannuation space with products like Verve (an ethical super fund for women). People want to see themselves reflected in a brand and this kind of positioning within the financial ecosystem is supporting that trend.
As the property market slows down, gearing (using borrowed funds to invest) is going to be become more sexy in other areas. Whilst credit is harder to get, if you can push through the admin, gearing your share portfolio is going to be more and more attractive this year.
What’s the one thing we can all do to improve our financial situation and outlook for 2019?
Invest more. I’m talking about shares here, get into it, even if the market’s hectic. Learn, start small, and ramp it up over time. Investing more means spending less (which means consuming less, great for the planet), working towards a place of self-insurance in the future and greater flexibility.
It’s pretty common to share our goals with friends. But should we be transparent with our money goals too?
One hundred per cent! The financial element is the final piece of the puzzle, and is likely to be an element that your friends can support you on. Like, “Hey Bec, didn’t you say you were saving for some renovations? Maybe we go to Chinatown for dinner tonight instead of Vue De Monde?”
Your friends and colleagues are often an untapped resource of financial hacks and quick wins. Let’s open up the conversation and learn from each other.
(Side note: Bec has a free ebook with tips and tricks on how to have better conversations about money).
What’s changing in the financial landscape?
Access to credit, like mortgages and loans has changed a lot in the last 12 to 18 months, and will continue this year. Let’s get ready for it.
It’s no longer a given that a bank will approve you for an application for a loan, so make sure you get your ducks in a row before you look to make a purchase on something.
Pre-approvals on property are now a ‘must’ instead of a nice-to-have.
Changes to credit card rules mean banks are now assessing applications in a much harsher light, which I take as a sign from God to say ‘Stay away from credit cards!’
There are always going to be changes introduced in each (Australian) federal budget, with varying impacts on Millennials. Offense is the best defense here. Know where you stand financially, and do not live too close to the line. For example, if rules on negative gearing were to change, would your investment property strategy still be viable? What if the property market softens? Can you take advantage of lower rents? If you weren’t able to refinance your home, what else could you do?
The introduction of open-banking in 2019 means that data is going to be more accessible for consumers. Knowledge is power, so let’s make the most of this, track our behaviour and adjusting accordingly.