Hello friends, and Happy New Year! ⭐
I hope you had a wonderful and relaxing Christmas & New Year’s break. I spent a lot of mine getting reflective for 2020 – a fresh new year and new decade. What an amazing 10 years it’s been, personally, spiritually, and financially! Here are some of the experiences the last decade has brought me:
Graduating from university, moving to a new city and back, travelling + travelling solo, buying my first car (and only car to date), buying a house, working many jobs including those in insurance, tax & banking, creating extra income from side hustles, saving for a wedding, and of course, transforming my money mindset!
What are your favourite milestones from the last 10 years? I highly recommend writing a reverse bucket list – it’s perfect for celebrating all the amazing things you’ve achieved and experienced, while setting your intentions for the future.
Today, I’d like to share with you my 2020 money goals, and the checklist I created to make sure I was starting the new year right. From credit card debt to savings & investments, managing my income to funding my aspirations, I hope you’ll find some inspiration for your 2020 personal finances too!
My 2020 personal finance goals are to:
- Save at least 20% of my income every single pay
- Purchase a new laptop (one that will enable me to start doing photography work again!)
- Clear my credit card debt for good
- Attend a spiritual retreat (typically 3-4 days with the price covering food, workshops & accommodation)
- Increase Kiwisaver contribution rate to at least 8%
- Have a trip to one of my dream destinations booked by the end of the year (if our Japan tour goes well, more Topdeck it is!)
- Take courses on creative writing and wedding photography, both shooting & editing
- Go on more staycations around New Zealand – there’s so much I haven’t explored in my home of 23 years!
And here is my five step checklist to help me achieve them:
1. Can you live on 80% of your income?
Why this is important: you’ve got to be able to live on 80% of your income if you want to have the other 20% (or more) to save, invest, or pay down debt! Following the 50/30/20 rule and having that 20% breathing space will help you reach your financial goals faster.
How I did it: first, I wrote down my fortnightly net income (rental + salary). Then I calculated 80% of this, and I had my number – the maximum my fortnightly expenses & spending could be. For example, a fortnightly net income of $1600 would mean that all of my fortnightly expenses & spending has to be less than $1280.
The next step? You guessed it! I collated all of my fortnightly expenses, including updated expenses for 2020 – new insurance premiums, new council rates, etc – and added them up. The total was less than 80% of my net income – success! – so I divvied up the 20% remainder to a combination of growing savings & reducing debt.
2. How much do you owe, and can you realistically clear it all in 2020?
Why this is important: you’ve got to know where you are in order to work out how to get to where you want to be. Don’t run away from your debt – confront it, create a plan for it and you’ll be on your way to debt-free living sooner than later!
How I did it: first, I checked my credit card balance. I have a credit card balance from some big expenses last year – Invisalign Lite, car maintenance on my Mini Cooper, and furniture – but which I’d balance transferred to my bank at 0% (yas).
Then, I simply noted the date that the 0% promotional interest rate would expire, divided the balance by the number of paydays between now and then, and voila! I know how much to send to the credit card every fortnight to clear it all – and pay no interest.
Note: 0% balance transfers are the best, but remember that only the balance you transfer accrues 0% interest; any extra spending on that credit card accrues the normal credit card interest rate! I cut up and disposed of my un-activated card as soon as it arrived in the mail, my way of preventing the temptation to spend, which may help you too.
3. How much do you need to save to fund your aspirations this year?
Why this is important: because life is for living! At the end of the day, money is there to help us become our best selves, and live our best lives. And I don’t mean ‘live our best lives’ in an ‘Instagram influencer’ way – I mean real change that helps us grow as a person, open our hearts & minds, become more cultured and aware, and bloom into our fullest, most authentic selves. It could be learning something you’ve always wanted to learn, developing a talent you already have, or travelling somewhere you’ve never been before.
You need aspirations to have something to look forward to, but you also need a financial plan on how to get there.
How I did it: this one is personal, but what worked for me was making a list of things I want to do alongside how much each will cost. For example, my dream 20 day tour of India would cost approx. $8000 pp including the tour, flights, and spending; my dream wedding photography workshops would cost $750 per workshop; going back to visit Melbourne this year (for PAX and the city itself!) would cost just under $2000 pp for a week, including flights, accommodation & spending. My ideal photography-friendly laptop may cost $3000 or more.
Why is this helpful? Because the more specific you are when setting goals, the more likely you are to reach them. Once you’ve got the specifics, you can start planning the how, step by step. Plus, it fuels your day to day sense of purpose and motivates you to keep going!
4. Are you on the correct tax code?
Why this is important: to make sure you’re paying the right amount of tax, of course! There’s only 3 months to go until the end of the financial year, and if you’ve been paying less than you should have since 1st April 2019, you’ll get a tax bill for what you should’ve paid but didn’t. If you are paying too much, you’ll get a tax refund and the excess money back – but why wait til then?
How I did it: I updated my tax code in October 2019 when my salary moved me up a tax bracket, but was recently reminded of it while searching through old emails. This time, I simply read over the IR330 tax code declaration form again to make sure I was on the right code. In the last year I’ve been on ME SL, then ME, then M (progress!). Along with being on the correct RWT rate (your interest rate at the bank) and PIR rate (your interest rate with investments, including Kiwisaver), I have peace of mind knowing that it’s unlikely that I’ll receive a tax bill after the 31st March this year.
5. Are you happy with your savings & investments?
Why this is important: to make the most of your hard-earned cash! You may be content knowing where your savings are, likely stashed away in an interest-bearing savings account, but why not see if there’s even more you can do?
How I did it: first, I looked over the interest rates for bonus savings accounts. I’m not likely to switch banks, although I would if their interest rates were significantly higher and worth the time-consuming transition (all interest rates seem appalling at the moment). I also discussed with my fiancé if it was perhaps worth doing another Notice Saver for general long-term life savings, even if we’ve now finished saving for our wedding. It’s a great idea for anyone who has long-term savings and the discipline to wait 2 or 3 months for a withdrawal!
Another investment I reviewed is our term deposit. Late last year, my fiancé and I received a large windfall, so we decided to lock it away in a term deposit. Depending on the type of term deposit you choose, you can choose for the interest to be paid out to your bank account regularly, added back to the investment for compound growth, paid out all at once at maturity, or reinvested into a new term deposit. So many options! So if you have a similar investment, it might be worthwhile to ask yourself, “Am I still happy with the option I’ve chosen? Is there a more beneficial way for me to go about this?”
I diarised the maturity date of our term deposit, too, which will be helpful if we have any large expenses around that time, or anything we may need to pay for using those funds.
Another important investment most of us have: Kiwisaver! Is your Kiwisaver invested with an ethical provider, who are investing your money responsibly and consciously? Does your current provider invest in fossil fuels, tobacco, alcohol, weapons, pornography, and other dodgy shit? If so, why not switch providers?
Lastly, are you happy with your Kiwisaver contribution rate? You can now contribute 3%, 4%, 6%, 8%, or 10% of your gross income to your financial future (thanks Jacinda)! If you’re an aspiring first home owner, this could be hugely beneficial to you and accelerate your savings fund, as you’ll be able to withdraw everything except $1000 when you buy your first home.
Or, if you just happen to have extra cash left over often, you could increase your contribution rate, as well as start payroll giving, using your money to help make the world a better place. (I’m currently donating to the Mental Health Foundation.)
I hope you’ve enjoyed my 2020 personal finance goals and checklist for the new year, and found some inspiration for your own. If you have any comments, questions, suggestions, or just want to say hi, feel free to comment below or message me anonymously here!
Wishing you a magical year full of abundance, joy, and many blessings,