A financial advisor has shared her top ‘financial hacks’ to help you to achieve your savings goals by the end of 2021, and it all starts with creating a budget and banishing ‘toxic debt’.
Canna Campbell, from Sydney, explained what she does every month to boost her savings and investment portfolio, as well as exactly how much ’emergency cash’ you need to set aside for a rainy day.
‘Whatever you do with your savings, it’s important to always write it down so you can see how far you’ve come,’ Canna said in a YouTube video.
‘It’s very easy to feel tempted to throw in the towel and give up, but when you look at your notes and see how far you’ve come, you get inspired by your own actions to keep going.’
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A financial advisor has shared her top ‘financial hacks’ to help you to achieve your savings goals by the end of 2021, and it all starts with creating a budget (Canna Campbell pictured)
The first and foremost thing you need to do in order to bolster your personal savings is get rid of any ‘toxic debt’ you have in your life (Canna pictured)
1. Get rid of toxic debt
The first and foremost thing you need to do in order to bolster your personal savings is get rid of any ‘toxic debt’ you have in your life.
‘Before you go about setting out to achieve any other financial goals like saving for a deposit, starting to invest or saving for retirement, you need to get rid of your toxic debt,’ Canna said.
Toxic debt is anything from credit card debt to car and personal loans, Afterpay services and overdue payments.
‘Prioritise doing this. Make a budget, go through your living expenses and tweak them, using any money you come up with to throw to these debts as quickly as possible,’ Canna said.
Paying off debt is never fun, the financial advisor added, but ‘facing the music’ will stop you from getting back into debt and repeating history.
How to calculate how much emergency cash you need
* Get out your budget and identify your living expenses for one month.
* Times this number by 12, as you need enough to live comfortably for one year.
* This is your personal emergency savings benchmark.
2. Build up your emergency funds
Once you’ve got rid of your debt, it’s time to boost your ’emergency funds’ – which will help you out of a tight situation, whether professionally, personally or medically.
‘With your emergency fund, I recommend you identify your living expenses for one month, and then calculate the sum of money you require to live comfortably for one year,’ Canna said.
‘This figure will be different for everyone, but this should be your emergency savings benchmark.’
Once you know your figure, start saving for it and move it into a new account that is separate from your everyday account.
‘Nickname it “my emergency money”, this is very important,’ Canna said.
‘It’s so easy to get distracted when temptation comes your way, but if your money is sequestered away in another named account, you’ll feel guilty if you remove it.’
‘To make a budget, grab a piece of paper and a pen and write down all your living expenses, cross referenced against your credit card and bank statements,’ Canna (pictured) said
3. Create a budget
Next, work on your financial goals’ savings, and for this you need a budget.
‘To make a budget, grab a piece of paper and a pen and write down all your living expenses, cross referenced against your credit card and bank statements,’ Canna said.
Stick to this budget and try and stay within its parameters.
If you don’t have a budget, you won’t really have any kind of clear idea where your money is going.
To work out your emergency savings goal, identify the amount of living expenses you need for one month and then times it by 12 for a year (Canna pictured)
4. Work out your financial ‘game plan’
A game plan is important whatever you’re doing, particularly when it comes to saving and investing.
‘Think about how you are going to make your goals happen and what you can do to make yourself achieve them faster,’ Canna said.
She recommends writing down your goals and game plan – as when you see it all on paper, you’ll feel much more motivated.
‘Also look at how you might achieve your goals,’ the financial advisor said.
‘What can you sell? Is there a side hustle you can start or a promotion you might look into? Can you cut down your living expenses or move?’
Write down how you plan on achieving your goals and check in with your budget and plans regularly to stay on track.
Once you’ve got your emergency savings account and started saving for your financial future, you should look to start investing to really build up your passive income (Canna pictured)
5. Start investing
Finally, once you’ve got your emergency savings account and started saving for your financial future, you should look to start investing to really build up your passive income.
‘There is nothing more empowering than opening up your own share portfolio, as passive income is the key to financial freedom,’ Canna said.
‘The more passive income you have in your life, the more your money is working for you.’
Canna has an investment portfolio worth almost $200,000 – and this pays her a passive income of minimum $7,500 per year. She also has other investments.
‘I have built that investment portfolio $1,000 at a time,’ she said.
‘You have to start somewhere.’
To find out more about Canna Campbell, please visit her YouTube page here.