If you're like virtually every other Aussie, you've probably emerged from the frantic festive season with a swollen waistline and shrunken bottom lineā¦ and you're probably getting all hard-line.
"I AM going to spend less in 2017," is perhaps your very first New Year's resolution.
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New Year's money resolutions
How do you keep your resolve and cut back on spending in the new year? Money editor Caitlin Fitzsimmons shares her tips.
Well, ditch it. You heard me. You are doomed to failure if that's how you approach your personal financial year.
The thing is, we all need strong motivation to resist instant gratification ā it's how we're built.
So recast your noble spending sentiment in a way that also lets you be naughty. Seriously.
With your "spare"Ā money (more on this in a mo), I like the 80:20 noble:naughty ratio. If you are responsible with your money 80 per cent of the time, I believe you earn the right to be a little reckless with the rest.
This kind of split also avoids the denial/binge cycle we see so much with food. Your health and wealth lifestyles need to be about moderation not deprivation.
But take this one step further and specify WHY you're being noble. The 80 per cent should be reserved for the longer-term stuff for which you endeavour to resist the latest shiny thing you've seen at the shops (or online).Ā
![After the party is over, many of us wake up with a financial hangover.](/web/20170103164246im_/http://www.smh.com.au/content/dam/images/g/t/c/f/2/r/image.related.articleLeadwide.620x349.gtcf7v.png/1481844771491.jpg)
Grab your partner if you have one, perhaps a bottle of wine and dream big.
Do you want to go on holiday next Christmas? Do you want a new couch mid-year? Do you want to take six months off to study in two years? Are you striving for a house deposit or a fully paid off home (the odd smashed avocado, with your 20 per cent fritter fund, will probably crystallise your resolve)?
Money is for spending. Just not all at once. Who would stash their cash ā or resist instant gratification ā just for the sake of it?
Once you've made your wish list, the next step ā or column on your dinner napkin ā is to cost it. You need to determine how much you'll need for each "life"Ā goal. Column three is how much you can save for your precious goals from each pay (and this will tell you pretty quick which ones you are more desperate for).
The final step for a tremendous 2017 and beyond is to divide the cost of your goals by your available saving for them in a given pay period (column four). This will show you the number of pays it will take to get there ā and then grab a calendar to find out precisely when this means you'll hit each one (yep, column five).
You may have to adjust your target dates ā but knowing when you can achieve them all will still give you resolveā¦ Every time you deviate you will push back your goal attainment date.Ā
Plus if the goals are tantalising enough, the anticipation will be delicious.
"But I have no spare money for this 80:20 caper!" I hear you say.Ā
You do, you just need to squeeze it out of your so-called fixed costs. Remember, if you've been with just about any provider for more than a year, they will be offering cheaper deals to new customers ā so become one.
Jump online on one of the many price comparison websites to price check everything from your energy (average saving probably $500 this year, says energywatch.com.au) and mobile phone (average saving $72, says whistleout.com.au), to your insurances (the average saving on health insurance is $1400, according to a search on privatehealth.gov.au) and loans.
And if you need more motivation, what you'll pocket from moving the average $373,000 home loan from the advertised big bank mortgage (5.25 per cent) to the cheapest loan (3.35 per cent) is $4773. Search on mozo.com.au for the top deals.Ā Ā
If you make just one New Year's resolution this year, let it be to refinance. It will make for a far, far sweeter '17.
Nicole Pedersen-McKinnon is a commentator and educator who presents Smart Money Start, fun financial literacy, in high schools around Australia. www.themoneymentorway.com
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