December, 2015

Set and achieve financial goals in 2016

Achieve financial goals

Setting financial goals helps you take control of money and your life, but how do you achieve this?  Your goals can be as simple and short term as you like, but it’s also worth including some long term ones to help you achieve your goals.  Setting goals helps you to identify priorities, giving you a better idea of what you’ll need to do on a daily basis.  Your goals should be meaningful to you, so take the time to think about what you want out of life.

How to set your goals

Be specific, realistic, and write down your goals.  Keep each one simple and be SMART:

S – Specific – outline exactly what you want to achieve

M – Measurable – how you will quantify your progress as you go

A – Achievable – it must be something that you can achieve, even if it’s a bit of a stretch

R – Realistic – again, it must be something you are capable of actually achieving given the resources you have available

T – Timeframe – set a deadline as committing to meeting it is how you get things done

  • Set some big goals – like buying a home in the next five years or saving for your retirement (this could be your biggest goal of all).
  • Set some smaller goals to help you get there – like saving for a deposit or paying off your credit cards.

Saving and paying off debt

Some common financial goals include paying off debt and building up your savings.

  • If you have a high interest debt such as credit card or hire purchase arrangement, your main goal should be to pay it off first and as quickly as possible.  This could involve restructuring your debt into lower interest loans, transferring the balance of high interest credit cards to an interest free option and setting a goal to pay it off before the end of the interest free period.
  • Having an emergency account with two to three months income in it can help you and your family if anything unexpected happens.  It’s a good idea to keep this account separate from your normal everyday bank account so you are not tempted to dip into it.
  • If you have a mortgage and can afford to increase your repayments, do so.  By simply overpaying each month you can save thousands in interest and pay off your loan early.  It’s also a good idea to have an account where you can redraw any overpayments.  You could keep your emergency savings in here, reducing the interest you pay on your loan.
  • The earlier you start saving for your retirement the better.  Even a small amount saved every week or month can add up to a lot over time.

Actions to achieve your financial goals

Having goals is great, but unless you take action to achieve them they are worthless.  For example:

  • If your goal is to save for a house deposit, your action may be to open a savings account by next pay day and deposit $50 a week into this new account.
  • If you pay your mortgage monthly, your goal could be to change to fortnightly repayments of at least half the amount you were paying each month. This will pay off your mortgage faster and save on interest.

Review your goals

Set a regular reminder in your diary or calendar to review your progress.  When you achieve financial goals, celebrate then set yourself a new one!

New Year is a great time to think about your goals – write them down!

Tip:  Research shows that if you write down your goals and review them regularly, you’re more likely to achieve them.

If you would like to talk to the team BSN & Co.  We can help you plan and achieve your financial goals.

Manage Finances in 2016

10 Tips to Manage your finances in 2016

The new year is the perfect time to set goals for yourself.  Perhaps you want to plan a holiday, buy a new car or do some home renovations.

To ensure that you have the necessary finances to achieve your goals, set yourself a budget.  We know this sounds boring, but if you want your goals to become a reality, this is the best way.

Check out our 10 top tips to manage finances in 2016

1. Track your monthly spending

Record all of your expenses for an entire month.  Include everything, whether it be coffees, fares, loan repayments, petrol etc, and include all direct debits.  At the end of the month, check each item on your list.  Could you easily trim some of them?  Keeping track of your spending is the first step in reducing it, so if you get into the habit of recording your expenses, then you’ll start to manage your finances more efficiently.

2. Develop a budget you can follow

Using the data you’ve compiled by recording your monthly expenses, you can develop a realistic budget that is easy to live with plus keep track of your various expenses.

3. Allow for some savings

Your savings are your “Rainy Day Fund”, which is important when unforeseen expenses or emergencies arise.  As soon as you get paid, transfer 10% of your wages into a savings account.  Get into the habit of doing this each pay day and it will soon add up.

4. Pay your bills on time

To avoid incurring costly late payment charges, make an inventory of your bills and set payment reminders for the dates when each one is due.

5. Set yourself an entertainment budget and take it out each month in cash

Once you have spent it, it’s gone, so think about what you want to do each week.  Also, by taking out the cash it makes it easier to track your spending.

6. Eliminate credit card debt

Credit cards can make it easy to overspend without thinking and if you are only paying off the minimum amount each month it will cost you heaps in interest charges.  Stop using your cards, remove them from your wallet and hide them so you won’t be tempted to use them.  Alternatively, check out some of the great interest free periods some cards offer on balance transfers, get one of these and then transfer what you owe on your card.  This way you can pay them off without racking up interest.

7. Minimise your tax

Speak to your accountant about what you can claim for and keep all relevant receipts for claimable items.  A good accountant will advise you on what you can rightfully claim and perhaps pay less tax in future.

8. Spring clean your direct debits

Take the time to review all the direct debits you have set up.  These are so easy to set and forget which is why businesses love to use them.  Are there any direct debits for things you no longer use?  If so cancel them.

9. Assess your insurance policies

Insurance protects you and your family against financial hardships and the premiums you pay can be one of your top expenses.  Talk with your provider to ensure sure you have the appropriate level of protection and that you’re not paying too much for cover.

10. Take the time to shop around

When your insurance policies come up for renewal, take the time to research the market for a better deal elsewhere but ensure you can get the same level of cover.  Or ask your provider if they can do a better deal for you.  You’ll be amazed at the discounts you can get by simply asking.

If you want to improve your personal finances, then speak to the team at BSN & Co.  We can review everything, look at possible tax savings and generally help you manage your finances in 2016.

2016 New Year Resolutions

New Year resolutions – we’ve all made them and broken them − often before the end of January!  There’s something about New Year celebrations that makes us yearn for a fresh start, but is there a way to make that desire for change more permanent?  Are your 2016 New Year resolutions achievable?

Here’s a twist that can make your resolutions more realistic, more beneficial and less prone to that embarrassing quick fade.

Align personal goals to your business

If you try aligning your personal and business goals, this can deliver more benefits than you might anticipate.  For example, suppose your goal is to take a month’s holiday next September – perhaps the first real holiday you’ve had in years.

If you’ve booked your tickets in advance, your goal has a fixed deadline and you’ll need to have the business ready to operate without you by the time you leave.  So what do you need to do?  You might decide the critical steps are to:

  • Start delegating more tasks to employees, beginning gradually to test their competence.
  • Create an operating manual so everyone can follow clearly defined procedures on all business processes.
  • Improve the accounting system (such as moving to a cloud-based program) so you can check the health of the business while you’re away.
  • Monitor the key performance indicators of your business so that senior staff can quickly take action on any slips from defined parameters such as a dip in the gross profit margin.

Aligning your personal goal of a holiday with your business goals provides both purpose and motivation to empower your original resolution.  Your goal is simply to take a real holiday, but achieving it will deliver extra personal and business benefits:

  • Learning to delegate to others means the business becomes less dependent on you, allowing you to take more time off.  Also, the business will seem more valuable to others when the time comes to sell or pass it on.
  • Improving the accounting system will lead to better money management and allow you to monitor cash flows in real time from anywhere in the world.
  • Recording business processes in an operations manual should lead to greater efficiency, increased cost saving and more consistent customer service. Documented processes will also make it easier and faster to train new staff, allow employees to cover when someone is absent from the business and allow you to franchise the business in the future if this is your aim.  You’ll also add significant value in the eyes of a future buyer.

Be SMART

When it comes to setting your 2016 New Year resolutions, use the SMART system (Specific, Measurable, Achievable, Realistic and Time frame).

  • Specific:  Be precise about what you want to achieve because vague or abstract goals such as “I’ll get fitter this year” are destined to fail.
  • Measurable:  Adding facts, figures or percentages to your goals allows you to track your progress.  What is measurable tends to get done.
  • Achievable:  Are you capable of achieving your goals and what steps are required?
  • Realistic:  Your goals need to have an element of challenge to take you out of your comfort zone, but they should also be realistic.   What results can realistically be achieved given the resources you have available?
  • Time frame:  Meeting deadlines is how you get things done.

Two more tips

1.  Keep it simple

Break goals down into simple, small steps.  For example, in order to complete your operations manual by the time you go on leave, aim to complete one section a month for each process such as customer service, shipping, order follow ups, credit management or inventory control.  Break this down further into smaller steps - e.g. what needs to be done each week, fortnight etc.

2.  Use Graphics

Creating a graphic such as a chart, calendar or graph not only allows you to check progress, but provides a visual impact which can be a strong motivator to keep everyone on track.

Have fun making your 2016 New Year resolutions, but the key is to make them achievable. If you would like help and support in running your business, speak to the experienced team of professionals at BSN & Co.  We can help relieve some of the load.

Don’t overspend at Christmas

Enjoy Christmas but don’t set yourself up for a miserable 2016

Statistics show that people who apply for credit in the lead up to Christmas are more likely to default than those who apply in the first 6 months of the year.  This is because they overspend at Christmas then can’t afford their repayments.

According to a Commonwealth Bank report issued last year, it was expected that the average Australian would spend $993 during the Christmas period.  While this may sound like a manageable amount, feedback from the budgeting app Pocketbook shows that 60% of Australians spend more than they earn during this time.  It’s this frivolous overspend at Christmas that lands people in trouble in the new year.

So how can you best prepare for Christmas without putting yourself in debt for the new year?

1.       Don’t forget your regular financial commitments

It’s important to remember that the festive season doesn’t just mean increased spending on gifts, but also on entertaining, eating out, travelling etc.   It can be easy to forget your regular financial commitments during this period (e.g. loan repayments, mobile phone bills, etc), so an overspend at Christmas compounds the problem in the coming months.

If you default on credit card or loan repayments, lenders may look unfavourably on you in the future because a default stays on your credit report for five years and this could prevent you obtaining further credit.

2.       Be realistic about your budget

Work out how much you can realistically spend on each person.  Remember that Christmas is about enjoying time together, not buying expensive presents.  You don’t want to spend the new year struggling to pay for gifts you purchased on your credit card.

If you are concerned about your budget, the chances are that others in your family are too, so suggest that everyone buys gifts just for the kids or do a “Secret Santa” with an agreed price limit on what each person spends.

With this in mind, here are our top 5 tips to avoid an overspend at Christmas.

  1. Avoid using your credit card:  If you can’t afford it now, you won’t be able to afford it in the new year.  Try lay-buying items and paying off a set amount each week so they’re paid for by Christmas.  This will help you spread the cost without going into debt.
  2. Set a clear budget of how much you can afford to spend and stick to it:  List everyone you have to buy presents for and calculate the total you’ll have to spend.  Don’t be tempted to go over it – every additional $5 adds up quickly!
  3. Keep track of your bills:  If you do use your credit card, make sure you keep track of all transactions.  This way, you won’t receive a nasty shock when the bill arrives.  It can be very easy to lose track when you simply hand over your credit card on a regular basis.
  4. Spend in stages and find bargains.  Make a note of your spend this year, then make a plan to shop in stages and find bargains in future years.
  5. Be realistic about what you can afford:  If you can’t afford to spend say $50 per person, then commit to a lower amount to avoid stressing out about it.  Again, suggest buying just for the kids or have a “Secret Santa”.  Or, if you’re able to, make gifts for your family and friends.

Remember to have a festive season you can enjoy without having to spend the rest of the new year paying for it!  Have a great time but try not to overspend at Christmas.

If you are looking for help and support to get on top of your personal finances, speak to the qualified team at BSN & Co.