The new financial year can be a pivotal turning point for those aiming to better their finances in the not-too-distant future. It’s a good opportunity for you to flip the page on your finance books, reevaluate your previous year’s spending and take stock of your debt situation. A key part of this is making small changes across various areas of your life to ensure that in another 365 days you’re in the exact position you want to be.

Here are our top 10 financial tips for the new financial year:

1. Think before you apply

Make sure you do your research before taking out any financial product in the new year. Ask questions, understand and know what you are getting into before you sign any contracts. Don’t start out your new year with unwise debt or insurance that doesn’t meet your needs.

2. Don’t shop around for the best rate by applying for credit

Applying for credit online can inadvertently damage your credit rating. Lenders will most likely request a credit history review through which they’ll be able to see the number of times you’ve applied for credit and when. If your record shows multiple applications within a short time frame it may influence a lender’s willingness to approve your application.

3. Make extra repayments off your loans where possible

To give you more equity and allow some financial freedom, make extra payments on your loans before the repayment date. Create a plan to save a little extra each week to put towards bonus loan repayments. Keeping ahead of your repayments will also help as supporting documentation for any future loans you wish to apply for.

Create a plan to save a little extra each week to put towards bonus loan repayments.

4. Guard your wealth and health

Ensure that you and your family are covered for worst-case scenarios by taking out income and loan protection, and health insurance. If the unexpected should happen loan protection may grant you relief from making loan repayments. Cover for things such as illness, accidental injury, unemployment and death will give your loved ones peace of mind.

5. Reduce the number of balances of any high interest loans

Consolidate your high interest rate debts such as credit cards into one lower interest loan where possible. This minimises interest paid and your actual monthly expenditure. You should also lower credit card limits as you pay them off to avoid ‘round about’ debt.

6. Borrow what you are comfortable with

Spend a considerable amount of time prior to borrowing to decide how much money you need on your personal loan. Do not borrow the maximum capacity allowed if you don’t need it. Borrowing within your limits is important for both you and the lender, so work with your creditor to figure out what is best for your personal situation.

The more you exercise your willpower, the stronger it becomes. Ask yourself if every purchase is a want or a need …

7. Save and teach, teach to save

Set an example for your children and teach them how to save. Open a children’s savings account and educate them on the importance of saving vs. spending. A few great tricks are to match them dollar for dollar that they save from their allowance, create a savings chart with goals and reward them for small milestones.

8. Learn (financial) self-control

The more you exercise your willpower, the stronger it becomes. Ask yourself if every purchase is a want or a need and don’t forget to reward yourself every now and then, but don’t go overboard. Set realistic goals if it helps you to cut back on your material spending and keep yourself accountable.

9. Know where your money goes

Keep track of which areas of life you spend the most money. Account for invariables such as monthly repayments, bills and subscriptions, but also note your average spend on things such as entertainment, dining and shopping. Input this information into a pie chart alongside your savings and prioritise which slices you can afford to cut back and how you can make that savings slice bigger.

10. Start an emergency fund

Alongside your income protection and health insurance, aim to save at least 3 months’ worth of living expenses as an emergency fund. This money can be relied upon to be a last resort in the event of an unexpected change in circumstances, death or natural disaster. Importantly, once saved, it should exist outside of your other finances. If your mortgage can be used as an offset account, it may be a good place to park this money and also reduce your interest payments.

This article was written in collaboration with PCCU

Featured photo credit: Tax Credits via photopin cc