FAMILY & RELATIONSHIPS
‘S.M.A.R.T’ planning to help manage financial stress
2 October 2018
This article is part of the Suncorp ESSI Money Family Challenge series, in partnership with the Financial Basics Foundation, an independent charity working to educate young people to better understand money and finances.
According to the Australian Psychological Survey1, financial issues are the top causes of financial stress. Talking with your family about your concerns when it comes to money might help ease some of the stress you’ve been feeling. There are many reasons for this – some of which are out of our control – but here are a few practical steps you can take to help manage financial stress if it arises.
S.M.A.R.T planning – set financial goals
Goal setting can give you a better sense of the bigger picture when it comes to your financial future. You might like to ask yourself the following questions:
Here are three types of spending to be aware of:
- Where do I want to be financially at different stages of my life? For example, when starting work, buying a home, having children, travelling and retirement.
- What are my attitudes to spending, saving, and giving?
- What’s really important to me? Do I value what clothing I wear, or what car I drive? Do I have to live in a certain suburb, or travel to particular places?
Once you’ve established some of the things you want, you can sort them into short-term, medium-term or long-term goals. You can also use the S.M.A.R.T. acronym (Specific, Measurable, Achievable, Relevant, Time based) to help figure out if your financial goals are appropriate for you.
Stay on track by creating a budget
There are 3 key parts to a budget: your income, expenses and savings or investments. Take a look at your financial goals and decide on an amount to set aside for savings. You could also put aside some money for your medium - and long-term goals.
Next, record your regular expenses, like groceries, utilities, credit card repayments, and your rent or mortgage. Once you’ve done that, you can decide what to do with any unaccounted for income that’s left over. This will be for discretionary expenses, like holidays, and remember: you can always reduce your spending in this category if you’re working towards a big long-term goal, like buying a house.
Online tools can be a great help her to visualise your spending.
Grow your net worth
This is the key to getting ahead. To work out your net worth, take what you own (assets) and minus what you owe (liabilities). Overspending by purchasing things you can’t afford using your credit card, and buying assets that depreciate (like a car), aren’t great for your net worth (or your financial stress). Whereas items that appreciate, like property, can be good for your net worth. While your teen might not be looking to buy a property any time soon, it can be valuable to understand net-worth, even if it seems too ‘adult’.
Seek professional financial advice
If you’re feeling unsure, you can seek out the assistance of a licensed financial advisor or financial planner. They can work with you to set realistic goals, create an investment plan and help you stay on track and achieve your goals. That way, you can start to practice what you preach and show your kids how it’s done.
1. Source: headsup.org.au
The Financial Basics Foundation is a non-for-profit charity focused on educating young people in money and personal finances. Their vision is, “that all young Australians are financially capable and can manage their finances now and into the future.” For more information visit financialbasics.org.au
This is general information only, current as at 20 November 2017 and is not legal or financial advice, nor is it intended to be legal advice or financial advice. It is not a recommendation or advice in relation to the Suncorp Group or any product or service offered by any company or entity in the Suncorp Group and does not take into account a person’s objectives, financial situation or needs. Before acting on this information you should consider the appropriateness of this information having regard to your personal objectives, financial situation or needs. The information is intended to be of a general nature only. We do not accept any legal responsibility for any loss incurred as a result of reliance upon it – please make your own enquiries.