Money goals to kickstart 2021

New year, new financial you! Here’s how to start 2021 off on the right foot.

Last year was a fairly terrible year for most of us but one good thing to come out of it was how it made us more aware of our money habits.

Recent research found that many Australians are embracing the money learnings from 2021 and resolving to improve their spending habits in the new year.

Here are some money goals to set this year.

Stick to a monthly spending plan

If you want to get in control of your finances, it’s important to know how much you spend each month by writing a budget.

Start by calculating your fortnightly or monthly take home pay. Then list out all your regular expenses such as mortgage repayments, bills, groceries, travel and petrol, car loan repayments, subscriptions, insurance, gym memberships, etc. Once you know how much you earn versus how much you spend, you can begin to work out if there are any areas you can cut back (such as having multiple TV streaming subscriptions).

Cut down on discretionary spending

If you really want to get a handle on what you’re spending your money on, go through your bank statements or download a spending tracker app. It might be confronting to see that you’re spending $200 on Uber Eats every fortnight or that you’ve managed to rack up hundreds of dollars in Afterpay debt by purchasing homewares and clothes online but sometimes a shock like that is exactly what it takes to change your behaviour.

By tracking your spending, you may even find that there are transactions coming out of your bank account that you’re not even aware of, like a subscription you signed up for and forgot about.

Pay off consumer debt

If you’ve got credit card or other consumer debt like a personal loan or buy now pay later debt, make it your goal this year to pay it off.

Write down all the debts you currently have including the amount you owe, who you owe, what interest rate you’re being charged and when it’s due.

Then you want to create a plan to pay off that debt. Some people choose to focus on the smallest debt first to give them a sense of achievement and keep them motivated to continue paying down the remainder of their debts. Other people prefer to pay off the debt with the highest interest rate first or transfer that debt to a lower interest rate by consolidating their debt through a loan or balance transfer.

Put money towards your home loan to increase your equity

Equity in your home is the difference between the value of the property and how much you still owe on it. Building home equity is important because it’s a resource you could tap into later on if you want to buy another home (this is known as a home equity loan). Equity in your home can also be converted to cash once the home is sold which can then be used to buy a new car, finance your home renovation, invest, or fund a holiday. It can also be used towards the deposit for your next home or investment property.

To increase the amount of equity in your home, you can increase the frequency of your home loan repayments. Rather than paying monthly, consider switching to fortnightly or weekly repayments to pay. Consider making extra repayments if you can, and put lump sum payments like your tax refund towards your home loan (as tempting as it may be to spend it all on yourself!).

Refinance your home loan to a more competitive rate

If you could describe 2020 in one word it would be ‘unprecedented'; not least because of the global pandemic but also because home loan interest rates plummeted to the lowest levels in history. With most home loan interest rates now at around the 2% mark, there has never been a better time for borrowers to shop around and get a better deal.

Let’s take a look at how much you could save by switching to this loan using our refinancing calculator.

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