Welcome to 2020 – the start of a new year and a new decade. It’s a year that could present lots of opportunities and the occasional challenge. This time of year is great for reviewing things in your life and setting some goals. So to help you make the most of 2020 financially, we’ve prepared a handy list of things to do at the start of the year.

Review your finances

The best place to start is to put your finances under the microscope and get a better idea of how you’re doing. Know exactly what you owe, what assets you own and what savings you have to put towards your goals, to invest, or keep for a rainy day. It’s also crucial to understand what income you’ll have coming in and what expenses you’ll need to pay. There are plenty of helpful smartphone apps that can be linked to your bank accounts to help you identify and categorise expenses, making it easier to see where your money is going. If there’s a big life event happening, like retirement, a wedding or a baby on the way, these can have a big impact on your finances.

To get a better idea of your situation, here are some questions to ask yourself:

• Are you on track to meet your financial goals by the end of the year?
• Could you save money on your home loan with a lower rate, or a cheaper credit card?
• Are there debts costing you more in high interest that could be consolidated into a lower interest personal loan?
• Will there be any significant changes in your finances, like your income, bills, expenses, insurance, investments, debt and savings?
• What parts of your finances need more attention or could be improved?

Set some goals and prioritise them

The next thing to do is to put some money goals down on paper. Think about three financial goals for the year and write down why you’d like to achieve them. Paying off credit card debt or personal loans should be one of your top goals, as it’s pretty hard to save much for the other things in life when you’re paying lots in interest charges each month

Your list may look like this:

• Goal 1 Pay off credit card debt to free up money
• Goal 2 Put the repayment money into a savings account to earn interest – start saving
• Goal 3 Reach $10,000 in savings in the bank – invest the money or put it towards a big purchase

Prioritising your goals over the quarters in the year will give you a good framework of achievable milestones to stay focussed on and tick off as you reach each one. Your goals could be:

• In quarter 1, focus on Goal 1 – paying off credit card debt
• For the 2nd quarter, turn your focus to Goal 2 – putting repayment funds into savings
• In the final two quarters, work on Goal 3 – save enough each month to reach your goal of $10,000

The theory of having fewer, more achievable goals is that you’re not working on too many of goals at the same time, so progress is more obvious along the way. Having you and your money focussed on one single goal increases your chances of success and means your motivation won’t drop – which is the biggest reason why people fail.

Make a plan

Setting a budget is the foundation for financial success. It’s also one of the most common pieces of financial advice you will ever receive – every adviser swears by it. A budget allows you to plan how your financial resources are managed, prepare for the future and increase financial stability. It can help you better plan household spending and keep a handle on your expenses, which means you won’t have to rely on debt for day-to-day living.  Start by identifying exactly what your fixed costs (accommodation, vehicle and other household utilities) and variable expenses (groceries, clothes and entertainment) are for each month. Go through your bills and bank statements to ensure you’re using accurate figures, rather than guesstimated numbers.

Then, see what things you can cut back on. While some of your fixed costs may not be easily reduced, looking at what you pay each month may challenge you to seek out a better deal through another provider. Where you can make big changes is by focussing on your variable expenses. Cutting back on eating out and replacing with a dinner at home can save you heaps. Other ways to save include catching public transport or even walking to work instead of driving, ditching that gym membership or streaming service you don’t use and cutting back on impulse clothing purchases.

Take action

Putting your budget into action is vital if you’re going to hit your goals. While it may seem overwhelming managing your finances effectively, you can easily keep track of your spending with one of the many smartphone apps available. You can also set up automatic direct debits to force you to save or pay extra off your debt before the money disappears on variable expenses. This is the simplest way to avoid relying on your willpower not to overspend. Linking everyday transaction accounts with a savings account that earns higher interest can also help, particularly when combined with a savings top-up feature that puts a set amount into savings every time you spend money from your transaction account.

Kicking some big financial goals in 2020 won’t be hard if you take some steps early and take control of your finances, leaving you in a much better financial position at the end of the year.

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