Financial management

22 tips for taking control of your finances in 2022

- January 14, 2022 5 MIN READ
piggy bank sitting on pile of coins with plant growing out

Author James Fitzgerald learned about money the hard way. But over the past decade he has transformed his personal finances, from being tens of thousands of dollars in debt to owning a booming real estate and investment portfolio.

As 2022 begins, James has 22 tips for taking control of your finances and becoming a savvy investor.

#1: Build positive habits

Start the new year by building positive habits around your money – whether it is saving, spending or investing. Identify productive behaviour and take action to stick with it. Commit to 21 successive days of repeating a new habit and you are likely to retain it.

#2: Healthy body, healthy mind

Make the first hour of the day just for you. Wake up early and get your heart going.

#3: Think about what motivates you to save money and build wealth

What do you want? How will your wealth benefit others as well as you? When you have worked that out, it will motivate you to achieve your goals – and when things become challenging it will help you focus again and keep going.

Woman in bed using smart phone

#4: Manage your screen time

The average Australian spends 5.5 hours a day looking at their smartphone alone. Having good habits around screen time is essential to avoiding burnout and attaining and sustaining success. Try to turn off your phone for two hours before bedtime and on at least one day of the weekend.

#5: Set small goals and reward yourself when you meet them

Chart your progress to remind yourself how far you have come. Remember, no-one gets rich overnight.

#6: Know where your value lies

Understand that the value in real estate investment is in the land, not the house that sits on it. Land values will always increase more than the building, which generally decreases in value as it gets older. For that reason, land with a house on it is a better investment than an apartment.

#7: Find a mentor

Ask someone who is financially successful and who has values and beliefs that fit with yours if they will mentor you. It could be a family member, friend, work colleague or neighbour. Catch up with them for coffee or a sandwich every now and then and ask them to help you better understand how to be successful with money.

Open wallet with cash and calculator on desk

#8: Know the power of cash over cards

It’s not fashionable to use cash any more, but by withdrawing cash each week for your discretionary expenses (eating out, drinks, coffees, movies), you can curb your spending. Once it’s gone, that’s it. Keep track of how much you are spending and eliminate random spending.

#9: Streamline your bank accounts

Set up three accounts: an everyday account, a ‘future’ account and an emergency account.

Get your salary deposited into the everyday account and pay your day-to-day expenses out of it. Set up the ‘future’ account with a different bank and set up an automatic transfer of 10 per cent of your pay into this from the everyday account. The emergency account should be similar to the ‘future’ account but used only for one-off expenses that pop up during the year, such as medical bills, insurance and holidays.

#10: Supercharge your savings

Do some overtime, take a second job or ask for a pay rise. Then try to increase your savings allocation from 10 per cent to 15 or even 20 per cent. It will make a huge difference!

#11: Start earning better interest

If you have managed to save $10,000 or more, place it in a term deposit so it starts earning some interest.

Stressed man sitting at laptop with coffee

#12: Look after your mental health

Lack of control over personal finances can cause enormous stress and worry. Seek professional help if you are suffering from anxiety or depression. A problem shared is a problem halved.

#13: Keep the cash flow steady

Cash flow is like oxygen. Invest in assets that pay for themselves. Don’t let the holding of your investment exceed 10 per cent of your take home pay.

#14: Review your home loan interest rate

Is it time to switch from variable to fixed rate? It’s a good idea to fix your home loan for your principal place of residence. Even saving half a per cent each year will add up to good savings and potentially take years off your mortgage.

#15: Put your ‘team’ in place

To be a successful investor, you need a good accountant, mortgage broker or banker, property manager and mentor. These people will be crucial to your success.

#16: Learn to use other people’s money to get your start in investing

This might be a bank’s money (a loan), or borrowing from family or friends for a deposit on your first property (but make sure you have a written agreement).

Colourful folders labelled 'Grants' and 'Applications'

#17: Get the grants

Investigate any government grants or concessions you are eligible for, such as first home-buyers grants, concessions on stamp duty or other financial assistance packages.

#18: Differentiate between your ‘needs’ and your ‘wants’

We need food and a roof over our heads. We don’t need an Xbox, concert tickets or an expensive new handbag. Make a conscious decision to be disciplined about what you spend money on.

#19: Detox from your subscription services

Even spending less than $10 a month on pay TV services can add up – especially if you have three or four! You could even cancel all your cards and order new ones to force a reset on all those commitments.

#20: Be a reader

Learning through reading is a powerful habit. Expand your knowledge on things financial and otherwise.

#21: You are who you hang with

Spend time with like-minded people who aspire to do well in life. The theory is that you will be as successful as the average of the 10 people with whom you spend the most time.

#22: Don’t wait

If you’re fortunate enough to be in a position to invest in something today, do it. As the past two years have shown us so clearly, you never know what’s around the corner …

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