Dont's start the New year with Credit Card debt!!

While some people in Australia are starting the new year with goals related to their health and fitness, Chartered Accountants ANZ is recommending that others get rid of their credit cards.

CA ANZ is recommending that Australians use this time to also focus on their finances and set themselves up for success in 2023. The New Year offers a fresh start in so many different ways, and CA ANZ encourages people to take advantage of this opportunity.

Simon Grant, CA ANZ Group Executive Advocacy, says that the month of January is a great time to set new goals and get into good financial habits.

Mr. Grant remarked that the previous few years had been fraught with a great deal of difficulty.

"Families are dealing with soaring costs of living pressures and rising mortgage repayments – and those who had built up savings during the pandemic are now eating into them. "

No matter what the situation is, and given that bad economic conditions are likely to last for a while, here are five suggestions that can help you improve your financial health in 2023.

1. Get rid of your debt.

Mr. Grant said that Australia is currently the fifth country with the most household debt in the world.

Since a lot of people have racked up some debt over the course of the past few years, it's about time to hit the reset button and make an effort to get that debt under control.

"We recommend that you begin by paying off your smallest debts first, as this will help to keep you motivated, and also that you prioritise your debts with the highest interest rates, as these will cause you the most financial stress.”

You can receive some free financial counselling by calling the National Debt Helpline at 1800 007 007 if you find yourself in serious financial difficulty. The number to call is 1800 007 007.

2. Resolve to reach a specific savings goal

When payday arrives, many of us have the best intentions to save money, but it's easy to get carried away and quickly spend what's in our account, which leads us to think, "oh well, I'll try again next month."

We advise setting up an automatic transfer on the day that you get paid to break the cycle of having good intentions but failing to follow through with them.

This means that as soon as the money you've designated for savings arrives in your account, it will be automatically put aside in savings.

"Search for a savings account that offers a competitive interest rate, and make it a goal to have an emergency fund in your savings that equal at least three months' worth of your income. "

In a perfect world, people's savings goals should be between 10 and 15 percent of their annual net income.

3. Think about the various investment opportunities you have.

"The idea of making investments is intimidating to a lot of people. To name a few asset classes, you can choose to invest in real estate, bonds, managed funds, or shares of publicly traded companies. It is in your best interest to do some research and figure out which potential investment opportunities are a good fit for you, even though it may be overwhelming to investigate. Be wary, however, of investment opportunities that guarantee rapid and significant returns; if something appears to be too good to be true, there is a good chance that it actually is.

"There is always the possibility of loss when you make an investment; therefore, you should consult an expert before making any decisions, and you should also do your own research."

4. Consult with your company's accountant for guidance.

"Chartered accountants have put in years of study and professional development to get to the point where they are able to advise you on the best way to structure your finances to make sure that your money is working hard for you.” “If you want your money to work hard for you, then you should listen to what these professionals have to say."

"For instance, you might be able to make voluntary contributions to your superannuation and receive a tax break on them," as well as "when to pay down debt and in what order," and "the taxation implications of various investments."

If you've recently moved to a new country, we can also assist you in navigating the complex tax situation that comes along with that.

5. Reward yourself when you accomplish what you set out to do (within reason)

"If you don't enjoy what you've accomplished, what's the point?" keeping common sense in mind, of course.

"Congratulate yourself by treating yourself to a delicious meal if you've been successful in reaching your savings goal or paying off your credit card debt. "Not only will you be assisting local businesses, but you'll also have the satisfaction of having earned the reward," Mr. Grant explained.