They say you can’t teach an old dog new tricks. But I think that’s rubbish – and slightly ageist as well. I don’t know about you, but the older I get, the more interest I have in challenging myself with new habits and ideas. We realise that, if we do the same thing over and over again, then we are pretty obviously at risk of getting the same results. And this is just as true for matters financial as it is for other well-worn habits.
Today marks the first day of a new month – and a new financial year. So it presents a terrific opportunity to undertake a modest review of your finances and change any habits that are no longer serving you as well as they once may have. Read on for five new year’s resolutions to ensure your new financial year delivers even better results.
1. Get rid of the guilt, move beyond any mistakes
Guilt can be a crippling emotion in many areas of our lives. While we may rationally understand that we can’t change the past, many people will spend time reviewing poor previous behaviours and beating themselves up over missed opportunities. This is especially true when it comes to money. Financial planners often discern a nervousness, even anxiety when discussing savings and previous investment decisions with new clients. It can be difficult to reset years of ‘emotional embarrassment’ regarding money, but the converse is true as well. It’s totally liberating to draw a line in the sand with a ‘that was then, this is now’ decision about your financial circumstances. Yes, maybe you could have saved more, yes, there was that poor investment choice. Yes, if you hadn’t sold those shares you’d now be rolling in it. We all know the sentiments. But it’s all wishful thinking. Why not agree that as of 1 July 2025 (yes, today), that what’s past is definitely past and what’s ahead of you is where you can have a very positive influence. No more rear-view thinking. Today is the day you’ll rethink your approaches to your savings, spending and investments. There’s no better time to begin than now.
2. Know what you have and what you earn
Okay, we can use more technical language like assets, salary, passive income, dividends etc.,, but it all boils down to the same thing. What you own and what you earn. You don’t need to create a complicated spread sheet either. It can (almost) be the back of an envelope. What do you own – house, house contents, cash savings, shares, investment property etc.? Of these items, some will earn a certain amount per year – use last year’s total earnings on these assets to estimate an approximate earning level for this coming year. And what do you earn from any work that you do? If, additionally, you receive any government entitlements, what do these amount to on an annual basis? Now total the earnings from savings and investments, any work income and any government payments. This will provide a clear idea of your annual income.
3. What do you need to live on?
Again, let’s keep this simple. The aim isn’t to try and project your desired retirement income. That can feel really difficult at times. The aim is to understand exactly how much you spent last year, which can be accurately ascertained from debit, savings and credit account statements (with any special transfers removed). By knowing the facts of your most recent 12-month expenditure, you can then compare this amount to the earnings from the same period and see if you have lived within your means or not. Many of us can ‘get away’ with overspending if we have redraw facilities on our mortgages or if we use credit cards without paying the full balance each month. Happiness is generally found when we live within our means. If you look at the cold hard facts that you are not doing this, then you have an excellent basis on which to make tough decisions on ways to reduce discretionary spending. This is a far better plan than staying in denial as your savings are eroded.
4. Now let the technology do the work
One of the best things to happen recently has been the development of incredibly efficient and accurate digital tools which can share immediate retirement income predictions based on highly individual inputs. We most likely take some of these tools for granted. But, as an example, isn’t it amazing to have your likelihood of receiving an Age Pension calculated within, say, five minutes? Given the data input runs to about 25 pages if you were to fill in a Centrelink Age Pension application form, this is super quick. Additionally, if you don’t qualify for the Age Pension at this stage, you can find out at the same time if you do qualify for a Commonwealth Seniors Health Card. You can also use the Retirement Essentials Retirement Forecasting tool to predict how your layers of income will combine in retirement (e.g. super drawdowns, Age Pension, earnings from private savings or work income) and how these will last across your retirement journey. So thinking that you need to do all your own calculations is just wrong. The tools have been developed, tested and are secure and easy to use. Your ‘what-if?’ questions can be addressed quickly and completely. This then gives you scenario comparisons which are a great aid to decision-making.
5. Learn one thing a week, change one thing a week
The late Michael Mosely was a source of great information and motivation to change habits and live more healthy, active lives. His ‘Just One Thing’ is one of my favourite books, full of bite-size changes we can all make to achieve optimal health. I’d recommend it to anyone. And the concept of making small, meaningful changes makes great sense for our financial wellbeing as well. Even so-called financial experts don’t claim to know the full details on every aspect of retirement income. But it is possible to learn enough to know the necessary questions to ask, and when further advice is needed. Reading Retirement Essentials week newsletters offers a great shortcut to staying up to date with all retirement income news that may affect your situation. Separately, you can click this link to read all the most recent news articles. And don’t stop there – reading the finance columns in the newspaper, watching finance updates on nightly news programs, listening to podcasts, and following trusted commentators on social media are all great ways of getting manageable ‘inputs’ on the world of finance. You can then decide, each week, which item or topic you need to understand better and spend, say, 30 minutes researching that issue and adding to your overall knowledge. Assuming you are happy to commit to this for 50 weeks a year, you will surprise yourself with your newfound sense of confidence and capability. Genuine knowledge isn’t some futile attempt to know ‘everything’, it’s knowing when you need to know more that matters most.
Are you planning to do things differently this financial year?
If so, what are you likely to change?
When the going gets tough
Retirement Essentials Retirement Advice Consultations can be tailored to suit your specific circumstances and needs so that, during a 55-minute online meeting, you can receive answers to your most pressing questions and enjoy guided scenario planning to preview your own likely financial future.
