Happy new (financial) year!

Happy New Financial Year! While the beginning of July is not usually a time to celebrate with drinks, stay up until midnight and watch fireworks, it’s a good chance to stocktake. Use this time to assess your financial goals and set some new ones, review legislation and really give yourself the best start for the upcoming fiscal year.

Financial goals for a favourable future

To set realistic financial goals, reflect on your current situation, consider future goals and set new ones for the next year and beyond.

Analyse your current financial position

Before you think about what you want from the upcoming year, it’s necessary to look at exactly where you are now. This could mean understanding exactly what income is coming in, and what it’s being spent on. Without an honest snapshot of your current financial situation—for better or for worse, it’s going to be difficult to work out how you’re going to achieve your desired financial situation.

Create a budget

The new financial year could be a great opportunity to create a budget, if you haven’t already got one, and could be the blueprint of your financial year. When creating your budget, often it’s best to consider not only income and predicted expenses, but also a buffer or contingency for those predictably unpredictable expenses which will undoubtedly occur throughout the year.

If you already have a budget, the new financial year could be the perfect time to review assess it and consider how realistic it was, if there were any expenses you may have overlooked and if it allowed you to meet your financial goals. If the answer is no, perhaps use this time to review and tweak your budget.

ASIC’s Money Smart website has a range of resources for setting up and reviewing your budget.

Setting financial goals

Financial goals can be really varied and very personal. They can be anything you want to work towards in the short and long-term. Goals could include saving for a house deposit, a relaxed retirement, building an emergency fund in case of disaster, leaving your 9-5 job to start your own business, eliminating any credit card or personal debt or ensuring that you don’t run that debt straight back up again.

But goals can also be smaller and used to take advantage of compounding interest. Setting aside $2 a day for your two year old child means that they should have enough for a reasonable car by the time they’re ready to drive.

These savings are only going to work if you know what you’re saving for. Write down your goals and stick them to the fridge, on your study noticeboard or somewhere you’ll see often. Not only will it make you feel good knowing you’re working towards something you want, but it’ll remind you of exactly why you’re doing what you’re doing and keep you motivated to stick to your budget.

Check for changes in legislation

The new financial year is not just an ideal time for you to review your own goals, but an important time to review changes to legislation. This year there were a lot of changes, coming into effect from 1 July. which will affect most Australians no matter what their age, or industry they work in.

There are changes associated with superannuation, private health insurance, payment summaries, sharing of data pertaining to your finances with new ‘open banking’, increases to the minimum wage, cuts to penalty rates, lowered thresholds on HECS debts and better quality NDIS services – just to name a few.

If you’re a small business owner that list is even longer and also includes an increase to the instant asset write-off scheme, the revoking of cash in hand payment tax deductions and changes to Single Touch Payroll.

Taking the time to budget, review financial goals, set new ones, check for changes in legislation and ensure your documents are up to date, can help set you up for a happy and prosperous new (financial) year.

For more on saving, check out our top tips for millennials or, if you new financial year stocktake has lead to reviewing your investment strategy for the year ahead, learn more about the importance of creating a diversified investment portfolio.