Set your BHAGs and break them down!

hairy-monsterAs a financial adviser, I love helping people realise their dreams and goals.  It’s one of the key reasons I do what I do.  And at this time of year, when everyone’s starting to come back to work refreshed from having put the brakes on for the festive season, it’s a really good opportunity to revisit some of those BHAGs (Big Hairy Audacious Goals) you may be working towards or have on your wish list.

 

It may seem that the bigger the goal, the more unattainable it is.  But I beg to differ, and here’s why.

The key is to break them down into bite size chunks, as well as careful saving strategies, using a budget planner and by setting up separate accounts or using the envelope method!

One of the most common BHAGs for Gen X and Y’ers is to save for a deposit on a house. Look at it strategically.  First, work out the amount that needs to be saved. Once you have this figure, look at how much time you have to save it.  Then, set a three-month, six month and 12-month goal, setting amounts that are achievable to save within each time frame.

It might take longer if you’re renting, so allow for that.  The best way is to work out what the repayments would be on a potential loan and save the difference between your rent and the repayments, plus a little more for those additions, repairs or extra costs and bills that come with owning your own home.  The thinking behind this is that it trains you to repay your mortgage. If you can’t save the difference, then you won’t be able to afford the house.  If this is the case you’ll need to reset your expectations.

To set up a savings plan, you’ll need to work out what you’ve spent over the past six months.  At JBS, we use some of the great budget planners on the Money Smart website.  These enable you to see exactly where your money is going and help cut back on future spending.  As well as using website tools, you can also set up separate accounts for bills, personal spending and home loan repayments.

At JBS, we have a Cash Coach program too, where we feed bank statements into the online accounting system, Xero, and coach our clients on where their money is going on a regular basis, you’d be surprised at how helpful this can be – just being accountable to someone else!

Our experience shows that these are some of the best failsafe ways to save money:

–  Taking your lunch to work, this can save up to $10 per day or $2,500 a year!
–  Walking and not taking the tram, helps with the fitness program too
–  Not buying a coffee on the way to work. A coffee at $4 each day will save more than $1000 a year!
–  Shop using a list rather than impulse buying and check for the discounts
–  Fill up your car on discount petrol days
–  Take advantage of discount movie days – like Tuesdays
–  Review your utility providers
–  Pay cash, not credit and if you can’t afford it, don’t buy it!

So go ahead, start today it’s worth it!

 

 

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