Financial health check: The five stages to keep on top of your money management

Key takeaways

  • The fundamentals of money management, including goal setting, budgeting, debt prioritisation, and investing for the future.

  • What to do to help ensure your financial goals are not derailed, such as setting up an emergency fund. 

In the hustle and bustle of our everyday lives, it’s easy to overlook the importance of our financial wellbeing. But just like our physical health, our financial health requires regular attention and care.

To help you navigate the path to financial success, we’ve outlined five stages that can assist you in keeping your money matters in check.

Stage 1: Setting clear goals

Every successful journey begins with a clear destination in mind. Similarly, managing your finances effectively requires setting achievable goals.

Whether it’s saving for a dream holiday, buying a home, or building an emergency fund, defining your objectives gives you a clear sense of purpose.

Start by categorising your goals as short-term, medium-term, and long-term. This will help you allocate your resources accordingly and stay motivated along the way by checking off accomplishments as you go.

Stage  2: Budgeting – your financial roadmap

Creating a budget is one of the fundamentals of sound financial management. A budget acts as your financial roadmap, helping you monitor your income, expenses, and savings.

Begin by listing all your sources of income, and then meticulously document your monthly expenses. Categorise your spending to identify areas where you can cut back and allocate more funds towards your goals.

Numerous user-friendly apps are available to assist you in tracking your spending and staying within your budget.

Stage 3: Debt management and reduction

Debt can be a significant obstacle to achieving financial well-being. When managing debt repayment, it’s important to distinguish between ‘good’ debt, such as an investment loan, and ‘bad’ debt, such as high-interest credit card debt.

Prioritise paying off high-interest debts as quickly as possible, while still making minimum payments on other debts to avoid penalties. Consider consolidating your debts or negotiating with creditors for better terms.

Remember, the sooner you tackle your debt, the more financial freedom you’ll attain in the long run.

Stage 4: Building an emergency fund

Life is full of surprises, and not all surprises are nice. That’s where an emergency fund comes into play. An emergency fund serves as a safety net, providing you with the financial cushion you need during unexpected events like medical emergencies or sudden job loss.

Aim to save three to six months’ worth of living expenses in this fund. Start small, even if it’s just a few dollars each week, and gradually build it up over time.

Having an emergency fund will offer you peace of mind and insulate your other financial goals from unexpected setbacks.

Stage 5: Investing for the future

Once you’ve established a solid foundation with your budget, debt management, and emergency fund, it’s time to think about long-term growth. Investing allows your money to work for you and helps you build wealth over time.

Research various investment options, such as shares, bonds, managed funds, and real estate, to find what suits your risk tolerance and financial goals. Diversification is key to risk minimisation – don’t put all your eggs in one basket.

Consider speaking to us. We can help you to make informed decisions that suit your individual circumstances and budget.

In Summary

Your financial journey isn’t a one-time endeavour; it’s an ongoing process. Just as you wouldn’t expect to maintain good physical health without having a sensible diet and exercise regimen, you can’t expect your financial health to remain optimal without regular check-ins.

Set aside some time each month to review your budget, track your progress toward your goals, and make any necessary adjustments.

Managing your finances might seem overwhelming, but by breaking it down into these five stages, you can take control and secure a brighter financial future.

Remember, the journey to financial wellbeing is a marathon, not a sprint. It requires patience, discipline, and continuous effort. As you embark on this journey, celebrate your achievements along the way and stay focused on the bigger picture. Your financial health impacts every aspect of your life, so taking the time to nurture it will likely pay off in the long run.

*Based on SuperRatings Fund Crediting Rate Survey, SR50 MySuper Index to 30 June 2023. Past performance is not an indicator of future performance.  The MySuper investment strategy changed from a single diversified to a lifecycle strategy on 22 March 2019. The returns for the MySuper Growth Portfolio for the period before 2019 are based on the previous single diversified investment strategy. The return for 2019 is based on the return achieved from 1 July 2018 to 22 March 2019 with the single diversified strategy, and the return achieved from 23 March 2019 to 30 June 2023 is based on the lifecycle investment strategy. The return for 5-years is based on return of the MySuper product over that period which had different investment strategies. All returns are net of investment fees and tax considerations and do not include administration fees and costs. For details of relevant fees and costs, refer to the PDS and Investment Menu.

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