Do you struggle to pay your bills every month? Does it sometimes feel like you’re never going to earn enough money to save anything? Has your goal of financial freedom remained elusive through the years?

Knowing and understanding the fundamentals of saving and investing is crucial if you want to take control of your finances and fulfil your financial goals. 

Sadly, many people delay managing their finances because of a lack of time or knowledge. However, the sooner you start financial planning, the earlier you can achieve the results you want. 

Being a successful investor is more than possible if you get the basics of saving and investing right. 

1. Set goals.

To start, set personal financial goals that are specific, measurable, attainable, realistic, and within sensible timeframes (S-M-A-R-T). Once you have identified your goals, you can make informed choices on how to achieve them.

Some examples of smart goals include saving $12,000 in six months or paying off your credit card debt within one year.

2. Save first.

Saving is essential for improving your quality of life. In the short term, having a savings safety net frees you from living paycheck to paycheck and allows you to access your money during emergencies. 

In the medium term, having a regular savings plan establishes your financial track record, which is essential if you apply for financing. It can also help you reach your goals, such as purchasing a new car or saving for a home deposit. 

Regular saving combined with smart investing can help supplement your superannuation when you retire and allow you to accumulate greater wealth in the long term.

To make saving easier, commit to putting money aside at the start of your pay period and spend only what is left. Automatic deductions from your pay or bank account to a savings account make it easy to save first.

3. Set a budget.

Budgeting is an essential tool for managing your finances and cash flow. List all your sources of income and outgoing expenses realistically, and make changes where necessary.

Set a weekly, biweekly or monthly budget. Commit to it and avoid overspending and impulse buys.

4. Consolidate accounts.

Consolidating multiple savings accounts can reduce fees and help you reach your goals sooner. The same applies if you have more than one superannuation account. Consolidating your super will allow you to save on administration and management charges.

5. Consider investing.

Investment returns are a crucial consideration when investing. When choosing to invest, you want to get the best return on your investment, whether through income or growth.

There are four main asset classes to choose from when investing: cash, fixed interest, property, and equities. You can invest directly or indirectly via a managed fund. 

If you don’t know how or where to start, a financial adviser can help you choose the right type of investment or one that’s compatible with your financial situation and goals.

By applying these tips and getting expert advice, you can stay on track and attain your financial objectives.

 

If this article has inspired you to think about your own unique situation and, more importantly, what you and your family are going through right now, please contact your advice professional.

This information does not take into account the objectives, financial situation or needs of any person.

Before making a decision, you should consider whether it is appropriate in light of your particular objectives, financial situation or needs.

(Feedsy Exclusive)