New Year refresh, small steps to cleaning your financial house

Now that 2023 is underway, it’s time to take stock of your budget, debt, and investments—and check them against your financial goals. These four steps can get you started.

1. Revisit Your Household Budget
Start the year by revisiting your budget. Assess your average monthly income, as well as your fixed and variable expenses, and determine your financial priorities for 2023 to develop the ideal budget for you. Reassessing your budget may be especially valuable now, as high inflation forces many households to allocate more for essentials like groceries and fuel.

2. Check Your Emergency Fund
It’s always a good idea to double-check that you have adequate funds set aside for a rainy day—but that’s especially true in times when we have economic uncertainty. Not only can an emergency fund help you to avoid liquidating portfolio assets at potentially depressed prices during periods of market volatility, it can also help keep you financially afloat in unforeseen life circumstances, such as a change in employment situation. A general rule-of-thumb for an emergency fund is saving three to six months’ worth of living expenses in a safe, liquid account. If you have a mortgage, having these funds available in an offset account is the best option.

3. Tackle Your Debt
Even if you’re already good about managing debt, consider taking steps to help reduce and consolidate it further. For example, if you’re expecting a pay rise or year-end bonus, consider applying the extra income to any balances with high-interest rates. Then, think about consolidating any remaining debt, which may help you swap a varying interest rates on multiple loans, credit lines or cards, for a potentially lower rate on a single loan. Reducing the number of loans you carry can also help simplify your financial life and ease money stress. If you have a fixed loan arrangement that is coming off the fixed term later this year, start getting ready for the higher interest rate adjustment by increasing the size of your repayments now, assuming you have access to surplus cashflow at this point in time. This will make the repayment adjustment easier when your loan changes later this year.

4. Consider your Investment Mix for the current Economic Climate
We’re definitely in a period of higher inflation and that looks set to be with us for some time to come. Assets that have a growth component are your best defence in these times, meaning shares and property will fare better than cash over the longer term. Of course, the downside is the volatility that comes with growth assets. Spread your investments in quality assets, maintain an appropriate buffer and take a long term view.

We wish you all the very best for the year ahead and we’re looking forward to working with you again.