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This is not advice. Items herein are general comments only and do not constitute or convey advice per se. The information contained in these articles is for guidance only and should not be relied upon without obtaining professional advice having regard to your direct circumstances.


Do you want to kick start your financial goals?

A higher salary can mean higher spending. To reach your financial goals you need to plan SMART.

Given that most people expand their lifestyle to fit their salary, saving for something special can be tricky. If you're trying to save for a new home, car or holiday, there are a number of easy strategies you can use to reach your goals sooner.

One of the best ways to successfully save is to use a proven planning technique based on SMART goals. You need to create goals, which are Specific, Measurable, Achievable, Realistic and Time-bound. Interestingly, the research also suggests that people who set goals and work toward them are happier and feel more successful.

Is your goal specific?

The most effective way to start any savings program is to have a clear picture of your end goal. Are you saving for an overseas holiday, your child's education or a deposit to start a share investment portfolio? You're more likely to stick to your savings plan if you have a clear picture in mind. For example, a general goal would be 'save for a holiday'. A specific goal would be 'save $25,000 for a holiday to Antarctica with my family in 2009'.

Is your goal measurable?

Without a specific goal, it's hard to know when it will be accomplished or even how much money to start putting aside. Once you've got a clear idea about how much you'd like to save, you can work out how much to save on an annual, monthly and weekly basis. Regularly measuring your progress is also a powerful way to stay motivated and on track.

Is your goal achievable?

While it's good to have dreams, your goals also need to be achievable in the time frame that you've set. It needs to be within reasonable reach otherwise you could be setting yourself up for failure.

How realistic is your goal?

If you're trying to save $25,000 this year but you're only earning $40,000, then your goal is probably not realistic. You will need to make some cutbacks in your lifestyle but if you're too restrictive, it's unlikely to work in the long run. The key to saving is sticking to your plan and also remembering to enjoy life at the same time. A big goal is also often easier to reach because it is hard to get motivated about a small goal.

Can your goal be timed?

To stay motivated with your savings plan, you need a defined start and end period. Without a clear time frame to achieve your goal, there's no sense of urgency.

Some practical saving tips include:
• Set up a budget so that you know exactly what's happening with your finances and where you can trim expenses.
• Set up a dedicated high interest savings account for your goal. There are a number of different options available including online savings accounts and term deposits.
• Pay yourself first by arranging regular deductions straight from your pay packet into this account. It's highly likely that you won't even miss the money after a period of time.
• If you get a bonus or a raise, put these funds straight into your savings account.
• Review the fees on your bank accounts to make sure that you're getting the best deal possible. By consolidating your accounts, you're likely to save on fees and charges.
• Use fee-free services where possible and avoid writing cheques if there are charges involved.
• Check if your mortgage package is still the right one for your needs. You may not need some of the additional features that involve a higher interest rate.

By finance journalist Melissa Wilkinson, AMP Financial Planning


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