Are you all set for the year ahead? The end of the financial year is the cue for most of us to look at our financial position and get off to a flying start when it comes to our finances. Hopefully you’ve set some goals and made some progress towards them. However anytime is really a good time to get control of your finances. In case you find that your expenses are trending higher than you’d like or—shock, horror! —higher than your income, this could be the perfect time for a fiscal makeover. The starting point is gathering up as much information around your spending as possible, starting with doing up your personal budget. We all spend crazy hours at work, managing towards our company’s budget. If it’s too hard, take a budget snapshot starting with your bank account statement or credit card statement. You really can’t set realistic financial goals and savings targets without knowing how your cashflow looks like and how much money you have at your disposal.

Once you understand your total spending, deduct your total expenses from total income. Whatever is left is what you have to work with. Any surplus cashflow could be used to reduce your debts or even kick start a regular savings plan. If you discover you don’t have any surplus income and have a budget black hole; identify areas where you are overspending and can cut back on. Another way of managing is this is identifying your needs versus your wants.

Needs are the must have items, that is the necessary things you spend your money on such as housing, electricity and food. Wants are the discretionary items or your “nice to haves”; clothing, entertainment and travel.

Another smart strategy is to “Pay Yourself First”. Do you manage to save anything throughout the year or are you are constantly relying on this month’s income to pay last month’s credit card bills? Do you spend first? Then rely on what’s left over and hope to save it? Get in the habit of paying yourself first, that is directing a percentage of your income to a hard to access bank account, at least to begin with. If you are really disciplined, you can direct this amount to a regular savings plan. Setting up a weekly or monthly direct debit (ideally matching the frequency of when you are paid your salary) you will remove temptation and set up the discipline to live within your means and save some money! Imagine that!

Another area to think about is how you are managing your debt. Review your home loans regularly. If you have a mortgage this is likely to be your biggest monthly expense so it’s a good idea to check how its structured at least once a year. Go online and compare interest rates. If your rate is no longer competitive ring your lender to discuss the options and consider switching loan providers if your existing provider doesn’t offer competitive rates. Be aware of any exit fees and implications of shifting your loan from one provider the next.

How you manage your credit card debt is also important. Make sure you pay your credit cards off by the due date and within the interest free period. Credit card debt attracts extremely high interest and should be managed carefully.

Other everyday expense areas worth reviewing are your electricity, phone, internet and insurances. You need to ask to get a good deal! Before you do, ensure you understand what your current plan/policy covers and research what’s on offer elsewhere. Make a practice of doing this once a year when your plan or policy is due for renewal. The savings over the longer term can be substantial and can be put to much better use reducing debt or growing your wealth.

Reviewing the basics and understanding your current position is really important when it comes to getting ahead of your finances. It’s not rocket science, but it takes some patience, allocating a regular time slot and some discipline!

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