Set achievable savings and investment goals

By now, most of us have submitted our tax returns, paid what we owe, or received our ATO refunds. For families, the next few months are a blur of sporting events, holiday and Christmas planning, wrapping up the school year, and hurtling toward the end of the working year. Financial planning can be low on the priority list; however, now can be the best time to reflect, reset your financial goals, and build a solid foundation for the year ahead.

Taking some intentional steps between now and December, families can begin the new year with achievable saving and investment goals that are realistic rather than overwhelming.

The last quarter of the year is the sweet spot for financial planning. We are far enough past the end of the financial year for families to have an accurate perspective on their spending, budgets, and tax outcomes. Secondly, we are leading into the new year, and January is a typical financial reset point. By taking stock now, families can see how the past financial year played out and how to minimise any mistakes and maximise any gains. They can prepare themselves for the Christmas period and budget for one of the more expensive periods of the year while getting ahead of any new year resolutions and setting momentum in place for a confident start.

Before setting new goals, it is worth speaking with your financial planner and undertaking a quarter-four check-in.

• Did we meet our savings targets for the financial year?
• Were there any unexpected expenses during the year, and if so, how did we cope?
• Did we pay down bad debt, did we review our mortgage payments, and did we need to adjust our budget?
• Did we make any progress on our previous savings and investment goals?

This doesn’t need to be an overly complicated discussion. A quick check-in to see what worked, where changes can be made, and what the next three months look like will go a long way toward finishing off the year on a positive note.

Raising a family comes with challenges, and money matters are one of many. A financial planner is the perfect sounding board for helping families manage their savings and investing goals. We always take a realistic approach, and we know that family time, while taxing, needs to be a positive environment for everybody. The biggest mistake a family can make is being too ambitious. Stress can take over if the target becomes out of reach, and motivation can dwindle. With the help of a financial planner, families can tailor their saving and investment budgets to ensure they are measurable and achievable.

Small steps add up. Saving $200pm toward a family holiday, making extra mortgage payments each quarter, and making a modest investment commitment each month will set up a solid, visible platform. Setting milestones and celebrating wins are part of the process.

Juggling multiple priorities adds layers to the saving and investment strategy. Families are dealing with competing agendas, such as school fees, mortgages, home improvements, family holidays, and more. More and more, we are seeing the care of elderly parents or relatives become an additional financial and time commitment. It is important to strike a balance between short-term needs and long-term growth.

The “bucket strategy” can be a helpful tool: three buckets, each for a different purpose.
Bucket one is for everyday use. This is cash for bills, groceries, and ongoing daily expenses.
Bucket two is for mid-term. A regular deposit into a high-interest savings vehicle for mid-term goals. A holiday, a new car, or home renovations.
Bucket three is long-term contributions for retirement and wealth building.

Knowing how much each bucket can receive, the tax advantages, structure, and adjustment tools are why a professional financial planner can steer your finances in the most optimal direction.

You don’t need to consider saving and investing as only valid when you have large sums. Small investments can grow significantly over time. As we discussed in a previous article, “the power of compounding”, compounding interest is the process where interest is calculated not only on the initial amount (the principal) but also on the accumulated interest over time. In simple terms, it means “interest on interest.” Unlike simple interest, which is calculated only on the principal amount, compounding interest allows your money to grow exponentially over time. Keep in mind, compounding interest will work the other way when applied to debt.

The idea is centred on consistent contributions and avoiding dipping into these savings so the compounding factors work in your favour.

The last three months of the year don’t need to be a financial write-off. In fact, they can be the launchpad to a highly productive new year and beyond. While now is a good time to reflect, it is also a time for action. If you need help or want to learn more about how a financial planner can help you start toward financial freedom, contact our office today.

Step Up Financial Group, now AFPG, has the expertise to guide you with professional, tailored financial planning strategies. It may be the best thing you can do.

Contact us today for experienced, compassionate, and professional financial planning advice.