Kin’s Money

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Every Friday I sit down and attack the paperwork that has piled up on my desk through the week. Mail, catalogues, magazines, bills, printouts, kids drawings, notes from daycare, serviettes with email addresses and phone numbers on them.

Since we get paid on Friday, and I’m of the “if it’s in the bank I can spend it” mindset, Friday works out the best day for me to pay the bills. The sooner the money is gone from my account the less likely I am to spend it, and thus get behind on my bills.

I’d like to say that my desk looks like that when I pay my bills but in reality it’s a mess of papers that I try and sort into some kind of order. I usually work on 3 piles: to file, to pay, to do. The to file and to pay piles a self explanatory. The to do pile is things I need to do something with. Cheques to be banked, statements to chase up, forms to be filled in. I try and do this pile as soon as I can, but it doesn’t often work out and some things can sit there for months.

But after today, it’s nice to know all the bills are up to date at least. Now if someone could just file the filing pile for me, my desk would be looking halfway decent. No? Oh well, it shouldn’t take me long.

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Personal Finance is not like an event at the Olympics. When trying to connect the two, I could only think about the process a city goes through in hosting the Olympics. It is not an event you can train for for 4 years, and is over in 10 seconds, 15 minutes, or even a couple of hours. It is a process that can take many years. And I thought about personal finance in relation to the 2024 Games in Brisbane (yet to be determined )

1. Initial Decision - Brisbane has not yet taken the decision to apply for the 2024 Olympics. Just as many people have not yet made the decision to master their personal finances.
2. Investigation - For Brisbane this means determining what will be required to apply for the games, and what will be needed to host the games. Investigating your personal finances is the first step to mastering them. What is the situation? Is it dire? Good? If you don’t know, you have nothing to work with.
3. Making a plan - When Brisbane has decided what is needed to apply for and host the games, it can begin to make a plan for the bidding, and hosting of the games. When you know the state of your personal finances, you can draw up a plan for how you’re going to master them. This may include a budget, a savings plan, a retirement plan, an investment plan. Remember too that these plans are not set in stone.
4. Set the plan in motion - at this point it’s worth noting that the 2024 games host city will not be decided until 2017. That’s right, 9 years from now. Personal finance is not a sprint! By beginning to act on the plan now, Brisbane will have 9 years to determine if the plan is working, and what needs to change for it to work properly. If your budget is not working, change it! Only by acting on the plan can you see its effectiveness. And don’t get too attached to the plan that you’re not open to change. Brisbane may find in a couple of years that they won’t be ready for the 2024 games, and decide instead to try for the 2028 games.
5. Be open to change - Just as the host of the 2024 games is not yet set, your plans are not set in stone. Priorities change, your situation changes. Interest rates go up, or down, food prices go up, fuel goes up. A budget is not a pice of paper, but a living idea. Some people budget each pay, each month. Don’t be afraid to change your plan.
6. Set targets along the way - Clearly 16 years away is a long time, if Brisbane doesn’t measure how they’re going in that time they won’t know if they’re on target. Similarly, unless you have shorter and medium term goals, you won’t be able to measure your success.
7. Enjoy the journey - That may sound like a bit of a dumb thing to say about personal finance, but like life, financial management is a journey, not a destination. If it was all work and no fun, no one would want to host the Olympics. Think of ways to make it fun - reward yourself, share the load, get the family involved.

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One of the nicest things about having a financial year that starts in July is the impotus to take stock of your financial situation halfway through the year. If you set financial goals at the begining of the year, now is the perfect time to take another look and see what’s working, what’s not, and how to fix it.

For most of us, tax cuts have kicked in this month, giving most people $10 - $20 extra a week in their take home pays. If you’re lucky you might have even scored a pay rise if you had a performance review last month.

Here are 5 things I do to take stock of my finances at the start of the new financial year:

1. Check the new tax tables at the ATO website to make sure the correct amount of tax is being taken out each pay.
2. Check your payslip and make sure any pay rises and tax are correct (while you’re there, make sure your annual leave is accruing at the correct rate).
3. Take a look at your budget/spending plan if you have one, and see what is working, and what isn’t (I’ll be writing a bit more on this over the next few weeks). Make a plan of attack to stay on track with your goals. If you don’t have one, think about creating one!
4. Start a folder to collect information you need for your tax return (PAYG Summaries, HELP/HECS statements, deductions reciepts, super statements etc).
5. Take a look at your financial goals for the year. Are you on track? Close? Nowhere near? Do you need to rethink them? Have your priorities changed? Have interest rate rises and increasing fuel and food costs been included? How is this impacting you achieving your goals? If you didn’t set any financial goals for this year - NOW is the perfect time to set some. Do you want to take a holiday over Christmas? Save $500 by the end of the year to pay for Christmas? Pay of a debt? Pay an extra repayment on your mortgage? Write it down and write a plan of attack to achieve it.

You should now at least have a better idea of where your finances are at than you did yesterday. Some of these can take a fair bit of time (like creating a budget) but others take only a few minutes and are the first step to staying on top of everything.

Is there anything in particular you do at the start of the financial year to stay ahead of the game?

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