According to a recent poll, 78 percent of Australians say the pandemic has prompted them to take financial planning action. After a year of financial hardship for many, individuals with the resources may be making financial resolutions for 2022 to get back on track.
Here’s how you may use these financial decisions to help you achieve your 2022 objectives:
1. Pay closer attention to finances
Due to the pandemic, two out of every five Australians say they’ve paid more attention to their finances, which is an excellent habit for everyone to get into, regardless of income. Tracking every dollar you spend for one to three months is an eye-opening method to get started. Once you have a figure, you may decide if it is the amount you wish to spend. Perhaps you spend exactly how you want on exactly what you want, but budgeting can help many of us connect our spending patterns with our values.
Not sure where to start? The 50/30/20 budget is a logical and straightforward way to allocate your income to your expenses: 50% for requirements, 30% for wants, and 20% for savings and debt repayment. This technique may not work for everyone — individuals in high-cost-of-living locations, for example, may find it difficult to spend only half of their income on necessities — but it’s a terrific objective to strive towards.
2. Increase your internet banking usage
Approximately 33% of Australians tried a digital banking service for the first time or increased their use of digital banking services as a result of the epidemic, while 32% of Australians conducted more of their bank activities online. Customers who bank online save time and energy while also reducing their risk of COVID-19 exposure by bypassing physical bank locations.
Online-only banks aren’t the only ones who provide services through the internet. Many physical banks offer applications and websites that allow consumers to accomplish much, if not all, of their banking from their computer or smartphone. Are you concerned about your safety? When logging into your bank accounts, avoid using unprotected Wi-Fi networks, use two-factor authentication, and make sure the online bank monitors for fraudulent behaviour.
Look for a bank with low or no fees and high interest rates if you decide to move to a more tech-savvy bank this year. You may not uncover anything game-changing because rates are near historic lows; nevertheless, prior trends indicate that they will rise when the economy recovers. Online banks, in particular, provide rates that are greater than the current national average savings rate.
3. When you have the opportunity, make savings a top priority
Over a third of Australians (34%) believe the pandemic has pushed them to prioritise saving money more than they did before it, and 31% say the virus has caused them to start saving or save more for emergencies since it began. In fact, when compared to their present spending habits, more than a third of Australians (34%) believe they will save more in the next six months.
Saving money consistently is a smart practice, whether you have a specific goal in mind, such as a down payment on a home or a more robust emergency fund, or you simply want to offer yourself options in the future. It not only helps you achieve a goal, but it also means you’re spending less than you earn, which means you’ll be better prepared to deal with a financial setback.
4. Put a savings system in place
You can utilise the 50/30/20 budget to determine how much money you can devote to your objective while also considering your debt repayment plans.
A savings account may be the best place to keep your money for short- to medium-term savings goals. Short-term investing includes a lot greater risk, so while growth in a savings account will be slower, your money will be there when you need it. If you want to build up an emergency fund to protect yourself from financial trouble in the future, a decent plan is to set away three to six months’ worth of spending.
Begin small: Start with a $500 or $1,000 savings goal and work your way up from there. It’s fine if it takes several years to accumulate a half-worth year’s of costs in your account. Consistently save, and consider using windfalls — such as tax refunds or rebates — to help you reach your emergency fund goal even faster.
Disclaimer: This article is not intended as legal, financial or investment advice and should not be construed or relied on as such. Before making any commitment of a legal or financial nature you should seek advice from a qualified and registered Australian legal practitioner or financial or investment advisor.