As we kick off another year, there is no better time to leave bad financial habits behind and get on top of your finances.
Of course, it’s one thing to set yourself a goal and another thing entirely to achieve it. One easy way to make sure you stay on track throughout the year is to automate your investing to make your money work for you. Here’s how.
1. Create a budget
Before you can really grow your money, you need to understand how you’re actually spending it.
It’s why budgets are the cornerstone of any successful financial plan. Whether yours is written down on the back of an envelope or closely monitored in an Excel spreadsheet, it’s about finding what works for you.
If you’re looking for a quick and easy template, you can check out the MoneySmart website for one you can access and update from all of your devices.
Once you know your limits, you can start putting your money to good use.
2. Crystallise your investment goals
The next step is understanding exactly where you want to go so you can begin thinking about the best way to get there. In that sense, you can think of your investment goals as a compass to help guide your financial decisions.
Are you desperate to own your own home? Achieve financial independence? Quit your job and travel for a year?
Whatever your goal, write it down and figure out how much wealth you’ll need to reach it. Not only will this keep you honest throughout the year, it will also continue to motivate you when the going gets tough.
Remember, patience is key. You can use this calculator to see just how powerful time is when it comes to investing.
3. Choose an investment strategy
There are one thousand ways to skin a cat and there’s just as many ways to invest your money. Now it’s time to figure out exactly how you want to grow your money.
Every investor is different and it’s up to you to determine the amount of risk you want to take and the amount of return you’re seeking. This will be in part determined by how long your investment horizon is – in other words, for how much time you’re willing to invest.
When it comes to the share market, index funds that track a market like the S&P 500 for example are typically considered less volatile investments than individual stocks although they may not offer the same potential for growth.
4. Set up automatic deposits
Now that you’ve got a handle on where you are, where you want to go and how you’ll get there, it’s time to start the journey.
It is easy to get discouraged or impatient at times, but consistency is one of the key tenets of any investment strategy. That’s why you should consider setting up automatic deposits into your investment account to ensure you’re always making progress towards your goals.
With Superhero, this step is easy. Simply log in to your Superhero account and check your Wallet for your individual BSB and Account Number.
Then log in to your own bank account and set up your Superhero account as a payee. Now you can simply set up a recurring payment whether it’s weekly, fortnightly or monthly. We’ll notify you when your money arrives in your account so you’ll always know where your money is sitting.
5. Check your super
Finally, a New Year is a great time to check in with your superannuation and ensure you’re in the right fund. Check out our superannuation checklist to understand what to look for when you do a review.
If you’re looking for more control and transparency over where your retirement funds are invested (remember 10% of your entire lifetime’s earnings is sitting in a fund) then perhaps consider moving to Superhero Super.
Please read our Product Disclosure Statement, Additional Information Guide, Investment Guide and Insurance Guide in addition to our target market determination for our Autopilot Account and Control Account for full information regarding Superhero Super.