new year resolution

Avoid the New Years money trap

How are you going with that New Year's money resolution? We identify some common mistakes and give you some tips on getting it right.

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Did you start 2017 with a New Year’s resolution to be better with money but somehow Australia Day came and those goals are starting to fade? Welcome to the money trap, and you’re not alone!

There’s research to suggest that the majority of people who make these resolutions, which are typically focused around health or money, often fail to see them through.

ME Bank head of deposits and transactional banking, Nic Emery cites five common money mistruths we often tell ourselves that can often derail our New Year goals.

1.     I deserved a treat. You only live once, right?

2.     I’ll pay off my credit card in full…next month

3.      I can’t follow a budget – it’s too hard!

4.     Things would be better if I earned a bit more

5.     I’ll never be rich

This might be where you need some serious strategies to put you back on track to achieve your money goals and to stop making excuses.

“It’s fine to treat yourself occasionally but be sure to budget for the cost,” says Mr Emery.

“We often have good intentions, but chances are something crops up that sabotages the best laid plans to clear credit card debt. 

“The best approach is to knuckle down and pay as much as you can off the card each month, and skip the urge to reload the card with fresh purchases until you have a zero balance.

“Also check the rate you’re paying too. It’s a lot harder to pay off a card charging a super high interest rate.

“If you feel you can save 5 per cent of each pay packet, set up an online transfer to shift this amount out of your everyday account and into a separate savings account. The remaining 95 per cent is yours to spend.

“We also have a tendency to increase our spending in line with a pay rise. So it’s not about how much you earn, but what you do with your money that shapes your financial wellbeing.

“In addition there are plenty of apps available that make it easy to see just how much you spend each day. It’s a great starting point to understanding how to make the money you have work harder.”

“Straightforward strategies like spending less than you earn, making a commitment to growing savings, and aiming to pay off debt that’s backed by here-today-gone-tomorrow purchases, are the cornerstones of achieving financial security. It means having control of your money today without worries about any curveballs that you may encounter in the future,” he says.

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