Are you sick of spending everything you earn or looking to save for a new car, a wedding or your first home?
With 2023 done and dusted, now is a great time to commit to your new year’s resolution of establishing a financial plan and building your wealth in the new year and beyond.
Regardless of your goals for 2024, you are much more likely to achieve them if you have a plan. Here are some of the age-old ways to achieve your money goals for 2024.
Set yourself a target
If you want to get serious about achieving your money goals in 2024, you need to set yourself a target that you can aim towards. The target you set must be realistic and take into consideration your current financial position, which is primarily based on your income, expenses, debts, insurance, investments and superannuation.
Next, track your progress on a monthly basis. To do this, enter your assets and liabilities into our budget planner or spreadsheet each month to ensure you are getting closer to your target. Our new budget planner is a great way to lay out your finances in an organised format and allow you to visualise what is possible.
Save in buckets
Now you may be thinking, having a target sounds great, but achieving it is always so much easier said than done. Well, this is where an approach like the ‘bucket’ strategy may be useful.
This popular approach involves implementing a 60-20-20 strategy.
In a nutshell, 60% of your paycheck should be allocated into a safety bucket. This bucket is for meeting your regular day-to-day expenses, such as rent or mortgage, food, phone bills, internet, car, clothes, pet food. All the things required for you and your family to live safely.
20% of your paycheck is then allocated towards your savings. These are the funds that will help you achieve the target which you have set. Now, what if you have debt? Well, paying off debt is in effect, saving. You are reducing the negative, which will in turn increase your overall net position. Start by knocking off small debts first, like parking fines, overdue membership fees, then larger debts like car loans. Also, you should be doing whatever you can to ensure your credit card is paid off at the end of each month.
Once your debts are under control, you can start to ‘pay’ yourself. Depending on the target that you have set for yourself, you may want to start allocating funds into a high interest savings account, start an investment portfolio, or commence additional contributions to superannuation. These are all positive things which will improve your net asset position.
The final 20% of your paycheck is for your discretionary expenses. Spending money on the things that get you up in the morning and make life worth living to the fullest.
Break that in half and allocate 10% to stuff that makes you feel good here and now. For some, this may be movies, shoes, or exploring new bars and restaurants. The other 10% should be used for expenses that take longer to save for, like overseas travel, cycling equipment, or new golf clubs. You will find that by giving yourself an allowance for spending on fun things, you will likely feel less guilt and enjoy them a lot more.
Now you are probably thinking, how do I monitor what money goes into which bucket? Do I have to do all this transferring and organisation myself?
To make this strategy feasible, the transfer of funds between these buckets should be automated. It will require you to establish different accounts through online banking, and then set up regular automatic transfers the day you get paid, before you have a chance to spend the money. Some banks have in-built ‘bucket’ functionality where you can do all of this from within a single bank account. If the payments are not automated, then it becomes a harder exercise and a chore, and the effectiveness of the strategy is likely to diminish.
If 2024 is going to be your year to accumulate wealth, knock debt out of the park and propel your financial position to new-found heights, then it’s time you made a plan.
If you are unsure where to start or just too busy, consider booking in for a free no-obligation consultation with one of our expert financial planners who specialises in helping medical professionals achieve their financial goals and objectives.
Want to learn more about how a financial adviser can help you? Check out our article – Mythbusters: Do I need a Financial Adviser?
Disclaimer: * The information contained in this site is general and is not intended to serve as advice as your personal circumstances have not been considered. DPM Financial Services Group recommends you obtain personal advice concerning specific matters before making a decision.