The sun is shining, the days are getting longer, flowers are blooming, the department stores are bringing in their Christmas stuff… yes, spring is finally here. Everyone knows that spring is the season of fresh starts. Most people will take the opportunity to do a bit of spring cleaning, getting to all those pesky once-or-twice-a-year jobs around the house. But right now is also a great time of year to review your finances.

Why now? Well, with the end of the last financial year and your tax return well behind you, you’ve got some great data to help you reset your goals and measure your progress by. You’ve also got a little breathing room before the end of the calendar year so hopefully you’ll be a little less pressed for time when you’re making some important decisions. It’ll also give you enough time to sustainably budget for bigger expenses in the new calendar year, from home improvements to holidays. Here’s how to get started.

Clear out the cobwebs
Take a minute to sit down and review your budget. Make sure you have all the relevant information from your bank statements, tax notice of assessment, budgeting app, etc. In the last twelve months, have you stuck to your spending and saving guidelines? If not, what patterns can you see that you’ll want to ‘clear out’ of your spending habits for the coming year? This is your chance to develop a plan for avoiding wasteful spending. For example, if you notice that you’ve spent a lot on takeaway meal delivery, perhaps you could try planning a week of meals or signing up for that cooking class you’ve always wanted to take.

Fix that safety net
Just like you fix all those broken hinges, cracked tiles and split frames around the house come spring, now’s a great time to fix your financial safety net – your insurance. The fact is, the various risks and liabilities in your life change all the time. Sometimes it’s a little more obvious, like welcoming a new baby, or moving house. But some of the risks you can insure against shift a little more subtly. For example, you may have made a few purchases that you should have included in your contents insurance, but didn’t add them individually at the time.

Plant seeds for the future
Herbs, fruits, veggies, flowers – all the best stuff is planted in spring for harvesting weeks or months down the track! While you’re in the ‘planning ahead’ mindset, have a think about your retirement income too. Chances are that by now, you’ll have received a statement from your super fund with the details of your contributions, returns, fees paid and more. Take this opportunity to review whether your super is on track according to your long term goals. Use the budget info you gathered earlier to see whether there’s room for you to make some extra contributions on a regular basis. If you do find that you’re on track, think about other ways to put your money to work for your financial future. For example, you may consider a type of investment that’s now right for your changed circumstances.

Reset and revamp
Working out whether you’re on track with your budget and goals is a great start. But when was the last time you thought about what those goals should look like? Everyone’s circumstances, desires and priorities change. It’s normal to not have the exact same financial goals from one year to the next. That’s why it’s a good idea to review your previous benchmarks, even if you don’t end up changing what you’re aiming for. Carve some time out of your schedule, sit down with your partner/family, and have a chat about your ideas of financial success or independence. Better still, make an appointment to come in and see us. We’ll help you get the fresh perspective you need for the coming year and beyond.

Over the last few years, interest rates have dropped dramatically. They’re now around a quarter of what they were a decade ago, and half of what they were just a few years ago. The Reserve Bank’s lowering of rates has got some economists and commentators talking; could it be time for a rate rise soon? Or will global conditions mean they have to keep pushing the interest rate down?

Nobody knows exactly when (or even if) the Reserve Bank will raise interest rates again. The good news, however, is that you’ve got a choice that allows you to hedge your bets. Whether you’re establishing a new mortgage or switching from an old provider, you’ve got an opportunity to choose between stability and predictability, and the potential for savings.

Australia’s economy improving
The Aussie economy has been growing slowly but steadily over the last few months. Though some experts are still cautious, others have pointed out that Australia has fared much better than other countries in terms of economic recovery.

Other countries similar to Australia have raised rates. Over the last few years the US has began slowly raising rates. But on the other hand, the European Central Bank has rates hovering around zero. Our Reserve Bank bosses say we’ve got a bit further to go in terms of economic growth before it makes sense to put rates up. But if history tells us anything, they won’t stay this low in the longer term.

Fixed rates = security
One of the main benefits of choosing a fixed rate mortgage is that you’ll have predictability over your repayments for at least the term that the rate is fixed for – usually three years. A fixed rate might be a good choice if you don’t have a lot of wiggle room in your household budget.

The main downsides are that fixed rates are usually locked in at a rate slightly above the current standard variable rate. This helps banks cover themselves in case of an upswing in the interest rate cycle. And depending on the product you choose, you may also be prevented from making extra early repayments without attracting a penalty. You will also generally not have access to offset accounts against a fixed loan.

Despite these downsides, fixed mortgages are still popular. Especially amongst the budget conscious, including first home owners and conservative investors. According to the ABS’s housing finance stats, the percentage of dwellings financed by fixed rate loans has grown slowly over the last yeari.

Variable rates = the potential for savings
Variable rates have the potential to help you save in two ways. First, if official interest rates go down, your provider’s variable rate may go down too. This means lower regular mortgage payments. Second, if you have a windfall or even just a generous salary bump, you’ll be able to make extra repayments to save on total interest, without incurring any penalties. Lower initial payments may also help make those first few years of mortgage repayments a little easier. Alternatively, home buyers may be able to afford to borrow more with a variable rate loan.

However, especially if your mortgage balance is quite high, a sudden jump in your variable rate could mean extra repayments that are tricky to fit in to your budget. Your repayments could vary by several hundred dollars if your interest rate changed by just a few basis points.

Comparing your options
Perhaps you’ve weighed up the pros and cons of fixed and variable rates, and you’re still wondering what you should choose. That’s fair enough – after all, saving money and having a predictable plan are both attractive options. Your decision could depend on a variety of factors, from your household budget to (if you’re investing) the other assets in your portfolio. We’re here to help you get it sorted, so make an appointment today to get on the right mortgage track.

i ABS 5609.0 – Housing Finance, Australia

The end of the financial year is always a busy time, whether you’ve been hanging out to do your tax return for months, or are struggling to piece together random receipts and paperwork at the last minute. However, it’s also a good time to review your financial affairs more broadly. After all, the best planning is done when you’ve got all the information in front of you.

How much tax are you paying?

Let’s be honest – it can sting a bit when you look at your pay slip and see how much tax you’re paying. To make the most of your tax return, you need to know ahead of time what you can claim and keep records to back them up. What you can claim will depend on whether you’re an employee or a sole trader operating a business. The general principle is that you can claim certain expenses incurred in earning an income.

Some frequently overlooked deductions include the cost of managing tax affairs (i.e. last year’s accountant or tax agent bill), depreciation on essential work equipment, and professional education costs. Just make sure you check the ATO’s guidelines or get professional advice if you’re not sure.
TIP: You may want to bring forward some expenses you were planning, or delay receiving some income (if you have a choice), in order to maximise your tax return. For example, you may be able to pre-pay up to a year’s worth of some expenses.

Are you making the most of your super?

This year is even bigger than most when it comes to sorting out your super. A number of changes enacted in last year’s federal budget may mean you need to make some tough but swift decisions in the lead-up to June 30. For example, the current concessional contributions cap ($30,000 per financial year, or $35,000 for members aged 49 or over) lasts until June 30. This is the same deadline if you are considering channelling some extra after-tax money in to your super. You’ve got until the end of the financial year to put up to $180,000 in to your super.
TIP: Make the most of higher superannuation caps before June 30. Consider making a personal super contribution (after-tax) and receive a government co-contribution up to a maximum amount of $500 if you are a lower income earner.

What are your long-term spending patterns like?

Whether you’re running a household or a business (or both), it’s hard to get an accurate view of your expenses based on any one month. Looking at your income and expenditure over the whole year can help you get some fresh perspective on where your money has been going. On the plus side, you’ll be able to identify opportunities to cut back on spending and save more towards your goals in the future. And the fun part (yes, there’s a fun part!) is that you can set fresh new goals to keep you motivated and disciplined.

TIP: It’s a good time of year to do a budget to see where your money is being spent and in doing so identify measures that can be taken to help you to achieve your financial goals.

Let us help…

 

Still feeling overwhelmed by end of financial year decisions? Or just wanting to make the most of the opportunity that this time of year brings? Either way we can help. Get in touch today to arrange a review.

i https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/

ii https://www.ato.gov.au/Forms/Deductions-for-prepaid-expenses-2016/?page=1#About_this_guide

iii https://www.ato.gov.au/super/self-managed-super-funds/contributions-and-rollovers/contribution-caps/

iv https://www.ato.gov.au/Individuals/Super/Growing-your-super/Adding-to-my-super/Government-super-contributions/

Do you ever feel as though you’ve only just made it to pay day with a few dollars to spare in your wallet? According to the statistics, you’re not alone. Research has put the share of the population living pay day to pay day at between 32 per cent and 46 per cent.ⁱ What’s more, many Australians say they don’t have (or couldn’t raise) even $500 to pay for an unexpected expense.ⁱⁱ

In a way, these numbers reflect the laidback ‘she’ll be right’ attitude that pervades our culture. But the reality is that we all live with risks, both big and small, that we can’t avoid.

That’s where a financial safety net comes in handy. Making sure that you are prepared for financial setbacks or unanticipated costs does not come down to any single measure. Rather, it’s a comprehensive approach to risk that’s designed to protect you and your family’s financial wellbeing, come what may.

Maintain a rainy day fund

The first line of financial defence for households is to have some money tucked away in a ‘rainy day’ fund for emergencies and unexpected costs. If you are living from one pay day to the next and your hot water heater bursts or your car needs urgent repairs, the temptation is to whip out the credit card.

If you are only able to make the minimum monthly repayment you could be paying off that hot water heater for years to come. Whereas paying cash will save you money and make your financial goals that much easier to achieve.

Most experts suggest you aim to put aside three to six months’ living expenses. This can take a while to build up so one time-honoured strategy is to ‘pay yourself first’. It’s a good idea to keep your emergency cash in a separate account from your everyday money.

Reduce debt

Even with the best willpower in the world it can be difficult to save if you are weighed down with debt. The good news is that with interest rates at or near their historic lows, there is no better time than the present to tackle debt. Aim to pay down loans with the highest interest rate first – typically this will be your credit cards.

If you have a mortgage, aim to pay more than the minimum monthly payment. By keeping at least three months ahead of schedule you can build a buffer to provide some wriggle room with your lender if you experience financial difficulties.

Review insurance

No financial safety net is complete without adequate personal insurance. We tend to insure our car and our house before we think about our most precious possession, our health and our ability to earn an income.

While health insurance will cover some of your medical costs, it won’t pay the mortgage and food bills or take care of your family while you are unable to work. Worse still, what would happen if you were to die prematurely? That’s where personal insurance comes in, to cover your life, total and permanent disability, trauma and income protection. It’s possible you already have cover for some of these through your superannuation fund, but it may not be sufficient.

We can help you find the right approach for your lifestyle and circumstances, giving you peace of mind without breaking the bank. Contact us today to start the conversation.

i MLC, ‘Australia today: A look at lifestyle, financial security and retirement in Australia’

https://www.mlc.com.au/content/dam/mlc/documents/pdf/retirement/save-retirement-white-paper-release-1.pdf

Research from BT Financial Group as reported by Sophie Elsworth for NewsCorp, ‘Cash-strapped Australians are living pay cheque to pay cheque’ http://www.geelongadvertiser.com.au/business/cashstrapped-australians-are-living-pay-cheque-to-pay-cheque/news-story/0460424acc29452a13977eef1a641fa2

ii Finder.com.au, ‘How a $500 emergency could spell financial ruin for millions of cash-strapped Aussies’ https://www.finder.com.au/press-release-may-2016-rainy-day-savings

Time to prepare for super changes

Investors have a brief window of opportunity to make the most of the current superannuation rules before new contribution limits and tax rates come into force on July 1 this year.

The reform package announced in the 2016 Federal Budget and passed by parliament last year is the biggest shake-up of super in a decade. The changes summarised below are likely to affect most people to some degree, and wealthier Australians more than most. But there is still time to benefit from the current rules.

Pension account limits

Super has two phases, an accumulation phase where you build up retirement savings in a low tax environment, and a pension phase where no tax is paid on earnings or withdrawals. At present, there are no restrictions on how much money you can hold in super. But from July 1, pension account balances will be limited to $1.6 million.

If you’re retired and have more than $1.6 million in your pension account, the excess will need to be put back into an accumulation account where earnings will be taxed at 15 per cent. Alternatively, you could take the excess out of super entirely. Failure to do so could result in tax being applied to earnings on any excess amounts, which is a compelling reason to start planning early.

Even though you will have six months’ grace to remove excess amounts up to $100,000 without penalty after the July 1 deadline, you won’t be eligible for any inflation-linked increases of the cap in future.

Lower contribution caps

This financial year, tax-deductible concessional contributions of up to $35,000 are permitted for people aged 50 and over, or $30,000 for the under 50s. From July 1, the limit will be $25,000 for everyone.

Tighter rules will also apply to non-concessional (after tax) contributions. Currently you can contribute up to $180,000 a year, or up to $540,000 by bringing forward two years’ contributions. From July 1, these caps will be reduced to $100,000 or $300,000 under the bring forward rule.

These changes provide an incentive for anyone with spare cash to take advantage of the higher contribution limits before June 30. This is particularly so if you have an opportunity to make a large non-concessional contribution funded by an inheritance, the sale of property or other assets.

The situation is more complex if you already have close to $1.6 million in super. From July 1 you won’t be able to make any further non-concessional contributions and any excess above $1.6 million held in a pension account will need to be removed.

Changes to transition to retirement rules

Earnings in a transition to retirement (TTR) pension will lose their tax exemption from July 1. Instead, all earnings on income and capital gains will be taxed at the concessional super rate of 15 per cent. Capital gains on assets held for longer than 12 months will be taxed at the discount rate of 10 per cent.

If you’re using a TTR pension in combination with salary sacrifice to boost your super, the removal of the tax exemption may reduce the final amount you accumulate for your retirement. While a TTR strategy is still attractive, you may like to contact us to discuss additional ways to boost your savings.

More high earners to pay tax surcharge

Under the existing rules individuals who earn $300,000 or more pay tax of 30 per cent on their super contributions, compared with the 15 per cent everyone else pays. From July 1, the tax surcharge will kick in once you earn $250,000 or more.

If you expect to earn between $250,000 and $300,000 next financial year, then you have an added incentive this year to maximise your concessional contributions (within your age-based limit). As always, the devil is in the detail. If you would like to discuss how the new rules could affect you and your retirement, contact us so we can help put plan in place to make the most of the current and future rules.

Getting to know your ‘money personality’

Ever wish you could get to the root of why your budgeting habits are less than ideal? Or perhaps you’re out to master your investment decision making process.

Finding out your money personality is a great start to developing the management, saving and investment strategies that are going to work best for you. Understanding your financial attitudes, habits and dispositions can help you protect and grow your wealth more effectively.
What are some of the theories?

Psychologists and other academics have studied financial behaviour for several decades. Our attitudes to money are largely thought to be learnt over time and will depend on your childhood and the environment you grew up in. If you look at your parents’ attitudes to money, are you emulating them in your choices or actively taking the opposite approach?

You can also take advantage of models that have been developed to identify different ‘money personalities’ or distinct attitudes and approaches to managing personal finances.

The Nine Money Personalities Model proposes that everyone identifies with one of nine types: entrepreneur, hunter, high roller, safety player, achiever, perfectionist, money master, producer, or optimist.

More simplistic models fall along the lines of: savers, spenders, risk averse, gamblers and those not really paying attention.

Risk profiling

Some models focus purely on a person’s behaviour as an investor. Specifically, they try to make sense of different levels of risk-taking.

The study of peoples’ engagement with risk is a big part of investment psychology. When it comes down to it, risk and reward is a very primal thing; our relationship with risk is a factor in most areas of our lives, from romantic relationships to recreational activities. In investment, tolerance and/or appetite for risk plays a big role in how you approach wealth creation.

Perhaps the best known risk profiling theory divides investors into two groups: active investors and passive investors. Passive investors tend to be risk averse and less comfortable with the ‘peaks and troughs’ that can characterise some investments. They are likely to choose ‘safe’ or conservative options. Active investors, as the title suggests, are more comfortable with risk. They like to feel in control of their investments, staying active in researching, analysing and decision making.

The Bailard, Biehl and Kaiser Five-way Model is a little more complex.ⁱⁱIt looks at investor confidence and preferred approaches to sort people into five groups. There’s adventurers (confident risk-takers), celebrities (hooked on the latest ‘hot tips’), individualists (confident but careful and analytical), guardians (conservative and focused on protecting their wealth), and straight arrows (average investors with a balanced approach).

How to work out where you fit (and then what to do about it)

Working out your risk profile or money personality, using any reputable scale or model, is a great way to better understand your unconscious biases towards money. Whether you want to fine-tune your everyday money management, get rid of bad financial habits or achieve better investment results, it’s an important starting point. For example, say you’ve found your investment returns limited because you can’t bring yourself to consider anything beyond the most conservative portfolio.

On the other end of the scale, if you’re tired of the ups and downs that tend to come with a more aggressive portfolio, knowing how and why your personality makes you predisposed to risk-taking is a good way to help yourself avoid situations where you make impulsive or overzealous decisions.

If you’re interested in exploring how your approach to money is impacting your wealth creation strategy, make a time to have a chat with us.

Boosting your brain health

Paul Taylor shares these tips to boosting your brain health.

I see a lot of advertising in the media for brain-training programs and games such as Luminosity, but are these things the best way to optimise your brain? The short answer is an unequivocal no. Aside from the fact that you are sitting on your butt to do these programs (which in itself is bad for your brain), there are much better ways to optimise that mass of jelly in your head! Some ways to boost your brain are well established in the research, and some other techniques are just emerging. Following is a well-rounded plan for getting the best out of your noggin.

1. Exercise

This boosts critical growth factors such as BDNF, FGF, VEGF and IGF-1, and also provides blood flow and oxygen, which are critical for brain health. For BOOSTING YOUR BRAIN HEALTH best results, a combination of short duration, high-intensity interval training combined with a baseline of lots of walking. Avoid excessive endurance training due to increased oxidative stress.

2. Nutrition

A diet based on real food with low processed food (especially sugar and processed carbohydrates) is critical for brain function. In terms of individual nutrients, the most critical nutrient for the brain is the omega 3 fat DHA from fish (the conversion of plant-based omega 3s to DHA is very poor), which help neurons to grow and communicate. Vitamin B12 also plays lots of roles important to brain function and iron is important for oxygen transport; good quality meat (especially organ meats) will provide lots of this. Lastly, curcumin seems to be protective against Alzheimer’s disease.

3. Sleep

Recent research has shown that sleep is critical for clearing toxins out of the brain, which is probably why chronically poor sleep is associated with greater incidences of Alzheimer’s, depression and other brain conditions. Aim for between seven and eight hours a night.

4. Novelty

This is absolutely critical to drive neuroplasticity, which will make your brain healthy and robust. Learning a new language or a musical instrument is great, as is continual education and doing new things, meeting new people and seeing new places. A highly routined life is like death by a thousand cuts for the brain!

5. Mindfulness meditation

Research has shown that this has a positive influence on gene expression and improves brain function. Recent research has shown that regular mindfulness practice can increase grey matter density in the brain!

6. Stress management

While some stress is necessary for us to develop and grow, chronic stress creates an inflammatory cascade in the brain, so dealing effectively with stress is important for a healthy brain. Meditation, yoga, tai chi, exercise and other relaxation techniques are good ways to protect against too much stress.

Whilst the US election outcome surprised many, markets have embraced a Trump led growth agenda, with most leading indices rallying since the election outcome. Whilst Trump policies are broadly accommodative for business and should provide economic stimulus, a number of risks remain.

 

Firstly, Trump’s protectionist trade policy may provide short term benefits for the US economy, it is largely seen as a negative, and whilst there are likely to be only minor effects in Australia’s current trade with the US, there is a China/US trade war looming which could have adverse effect on wider global trade dynamics.

 

Another issue for our domestic economy is the increasingly uncompetitive Corporate tax rate.  With our rate broadly set at 30% and many competing Western economies significantly lower and the US targeting 15% under Trump, pressure is mounting on Canberra to make a more concerted effort for tax reform.  If the US gets anywhere near 15% and we remain at or close to 30%, our ability to draw and retain capital in this country will be significantly diminished.

 

There is also a legislative or process risk with the new US parliament.  Whilst Trump has a fairly clear agenda, and appears to have Republican numbers in both the House and the Senate, there remains some risk to him garnering support across the party.  I also hold some concerns regarding the pace of change.  Trump, a self confessed outsider, may not be used to the legislative and bureaucratic processes, and his desired pace of change may not be matched by reality.

 

The final concern relates to the management or containment of inflation should the US succeed in its aim to inject growth into its economy.  Whilst inflation between 2% and 3% is regarded as a ‘Goldilocks’ setting, where wages and asset prices rise at steady pace, thus creating wealth, if inflation gets out of hand there can be severe detrimental effects not the least – Central Banks spoiling the party by setting significantly higher interest rates.

 

As usual, we’ve concentrated on the risks in the above but on balance I think the policy agenda is broadly positive and with reasonable execution should lead to the world’s largest economy returning to above average growth, which in the past has been good for most economies around the globe.  Another predictable outcome will be the A$ depreciating against the US$, which will be a positive for our economy with most business benefiting from improved trade on currency terms (not so great if you are planning an overseas trip!).

 

We expect markets will kick along well around the Christmas break on lower volumes, but with a number of Government changes around the globe and continued unprecedented Monetary policy settings to be unwound, we expect 2017 will bring about one thing we have become used to – and that’s volatility.  So take a deep breath and embrace the opportunity.

Starting on the January 1 2017, those with assets above a certain level will have their pension either cut more drastically or eliminated altogether. Those with assets (not including the family home) above a certain level will also suffer cuts. Some industry commentators estimate that over 300,000 pensioners will have their pension reduced, while 100,000 will lose it altogether.ⁱ

What’s the big change?
First, let’s look at the change to the assets test. The good news is that the assets test free areas will actually increase, so some people with lower total wealth will become eligible for a full pension. The not-so-good news is that anyone with assets above the new upper limit will lose their part pension.

	Current full pension asset limit	New rule (1/1/17)
Single homeowners	$209,000	$250,000 △
Single non-homeowners	$360,500	$375,000 △
Couple homeowners	$296,500	$375,000 △
Couple non-homeowners	$448,000	$575,000 △
	Current part pension asset limit	New rule (1/1/17)
Single homeowners	$791,000	$547,000 ▽
Single non-homeowners	$943,250	$747,000 ▽
Couple homeowners	$1,175,000	$823,000 ▽
Couple non-homeowners	$1,326,500	$1,023,000 ▽

 

The taper rate will also change from $1.50 to $3.00 for every $1,000 of assets owned over the asset threshold – the full pension asset limit.ⁱⁱ This means that, if you’re set to be at the upper end of the range between the full pension limit and the part pension limit, your actual pension payment amount will be reduced.

In summary:

• More people with a low level of assets will be eligible for full pension
• Some people with just over the full pension asset limit will get slightly higher payments
• Some people with just under the new part pension asset limit will have their payments reduced
• People with more than the part pension asset limit (effectively created by the new taper rate) will lose their part pension
What can you do?
There are ways you may be able to reduce your assessable assets. One is to make improvements to your principal home. Funds spent on home improvement and renovations generally aren’t counted in your assets test. This is essentially because you’re converting it from an assessable asset (cash) to an exempt asset (your principal home).ⁱⁱⁱ

So, if you’ve been considering redoing your kitchen or bathroom anyway, or perhaps getting a pool or even a garden makeover, now might be the time to do it.

Another option may be to give away some of your money or other assets, whether it’s to family and friends or to charity. It’s important to make sure that anything you give away fits within Centrelink’s gifting rules, which are the same for singles and couples combined – $10,000 in one financial year, or $30,000 per five financial years.

It’s also important to look at the changes from the point of view of your overall retirement budget. For example, age pensioners who lose their pension as a result of the changes will automatically get a Health Care Card and a commonwealth Seniors Health Card.^iv These cards help save money via lower health care costs, prescription costs, and some other concessions.

We understand that these changes may be confusing. If you’re still unsure about how your entitlement or income will be affected, please contact us.

i) superguide.com.au/smsfs/300000-retired-australians-to-lose-some-or-all-age-pension-entitlements

ii) https://www.humanservices.gov.au/corporate/budget/budget-2015-16/budget-measures/disability-and-carers/social-security-assets-test-rebalance-assets-test-thresholds-and-taper-rate/

iii) https://www.humanservices.gov.au/customer/enablers/assets/

iv) https://www.humanservices.gov.au/corporate/budget/budget-2015-16/budget-measures/disability-and-carers/social-security-assets-test-rebalance-assets-test-thresholds-and-taper-rate/

 

How to make New Year’s resolutions that stick
How many of last year’s New Year’s resolutions did you keep? If you can’t even remember them all a year later, let alone whether you stuck to them, you’re not alone. One survey found that 58% of Aussies break their resolutions within the year. And 15% of those do so because they forgot what they promised they’d do in the first place.i

That doesn’t mean that you can’t set and achieve things you actually want. You just have to be smart about the way you do it.

Turn visions in to goals
When someone asks you to picture your ideal lifestyle, what you see in your head is actually a collection of dozens of different goals. It’s important to break it down and articulate those goals if you want your vision to become a reality.

This is easier than it sounds. Just say you want to ‘enjoy life more’. To make a start on this, you could write down a list of social activities and hobbies you love doing or would really like to try. Then turn each one in to a task that fits with your schedule and can be planned ahead of time, like ‘Make a date with a friend twice a week’ or ‘Book in for an evening class every month’. If your schedule is jam packed, set corresponding time management goals like ‘Leave work on time at least 3 out of 5 days’.

Tell people
Think of your friends and family as your cheerleaders and supporters in reaching your goals. If you tell them what you’re aiming for and why, they’ll be better able to help you. They might even be able to join you on your way. For example, if you decide you want to lose weight and get fitter, ask around for a gym buddy or someone to join you on walks. Or if you’re ready to make a change in your career, start putting the word out amongst your network that you’re open to new opportunities.

Give yourself (the right amount of) time
Yearly goals, especially ongoing ones, can be hard to keep track of. Try to work out a reasonable time frame for your goal. Some small things might be quicker, and feel less significant – but you can always build on your results. And some things just take time. For example, you’re unlikely to save up for a new car or lose 20 kilos in a month. But you might lose two kilos, or save X-percent of the amount you need. Consultant Todd Herman reckons the ideal time frame for the brain to plan around is 90 days, and that it’s better to do a series of goals ‘sprints’ rather than one long marathon.

Keep track of your progress
If you’re the kind of person who uses to-do lists – on paper, in an app, or in project management software – you’ll know how satisfying it is to tick something off. If you’re not in the habit of keeping lists, now is the time to start. Your list shouldn’t just be one point – your resolution with a check box next to it. Break it down in to smaller milestones. Say you’ve resolved to improve your diet – set yourself little achievements like ‘went a whole week without eating favourite junk food’. To make it fun, try a smart phone game like Habitica.ii

Don’t wait ‘til December 31st
It might be a New Year tradition, but you don’t have to wait for one particular time of year to set goals and resolve to change your life. With the right attitude and a bit of planning, you can start working your way towards a goal any time.

Speaking of, we’re here to help you set and achieve your money-related goals. Don’t wait for an annual appointment to chat; drop us a line any time, we’d love to hear from you!

i. finder.com.au, Be a geek and live in Tasmania: How to win at New Year’s resolutions

ii. Habitica