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Money Mindset – How to Make Your Money Work for You

December 22, 2023

So, your New Year’s resolution is to buy a home in 2024. But how will you make that happen? With rates at a 12-year high, first home buyers are facing increased mortgage costs and higher monthly repayments. Though this might make buying your first home more challenging, it doesn’t put your goal out of reach. With the right money mindset, you could have the keys to your dream home before the year is out.

What is your Money Mindset?

Money mindset is the way you think about and approach your personal finances. As a first home buyer in today’s challenging economy, your money mindset needs to be proactive, dedicated and planning-oriented so you can make friends with budgeting and prioritise your goal of home ownership.

That’s not to say you can never spend money on the things you enjoy. After all, life’s not worth living if you can’t splash out at Happy hour every now and then. But to make your money work for you, it’s crucial to get a handle on your spending and saving habits, assess your financial capacity and consider making budget and lifestyle adjustments.

It also helps to keep an eye on market conditions, government initiatives and incentives, as well as property trends. That way you can align your budget and savings with shifting market dynamics and make informed financial decisions throughout the year.

Reassessing your financial situation and honing your money mindset can feel like an uphill battle. It’s a good thing then that there’s no shame in asking for help. It’s free to consult a mortgage broker — like us — for help with assessing your finances. A mortgage broker can also guide you in creating a budget and financial goals that bring you closer to buying your first home — winner, winner!

The Benefits of Reassessing Your Finances Every New Year

You can expect your money mindset to change throughout the span of your life. At the start of each new year, it can be helpful to take a step back, reassess and adapt your money mindset, financial objectives and plans to where you’re at personally and financially. There are several benefits to doing this:

Improved Budgeting

Reassessing your finances allows you to create a realistic budget that keeps you tracking towards your goal of home ownership. This can help you allocate your money efficiently and effectively, ensuring that you have enough funds to cover your mortgage, living expenses, savings and other non-negotiables. That way when you’re saving and building up a down payment, you don’t have to sweat the small stuff.

Making a budget doesn’t have to feel like the fun police are knocking at your door. It’s important to understand that while you might have to make some sacrifices (do you really need to be subscribed to every single streaming service out there?), the right budget will strike a balance that fits with your lifestyle.

Enhanced Affordability

Understanding your financial position helps you to determine the mortgage you can afford. While it’s fun to lust after mega-mansions and country estates, this knowledge allows you to keep your home-hunting limited to places that align with your budget and financial goals.

Optimised Savings

By re-evaluating your financial situation, you can identify areas where you’re overspending which can help you formulate a plan to save more effectively. This could involve cutting unnecessary expenses — partially or completely — or finding ways to increase your income, helping you to save up for a larger down payment. Remember, it’s the little things that can add up in a big way.

Government Incentives

State and federal governments often offer incentives and initiatives to assist first home buyers. By reassessing your financial situation, you may become (or realise you already are) eligible for certain grants, concessions, or special programs that can make homeownership more affordable and attainable.

Reduced Financial Stress

Understanding your financial position reduces uncertainty and stress. This clarity allows you to approach the home buying process with confidence, knowing exactly where you are, where you need to be and how you’re going to get there.

Updating your budget for 2024

Funneling your proactive money mindset into an action plan is tricky business. If you consult a mortgage broker to help you do the hard yards, here’s what you can expect updating your budget to look like:

1. Review any previous budgets you had and consider what did and didn’t work, and why that might have been. Getting ahead of past mistakes and roadblocks will help your new financial plan work for you.
2. Assess your income for the year. What is your expected salary going to look like? Do you have any additional income streams available to you? Knowing how much money you’ll earn will help you spend in moderation and save in alignment with your goals.
3. Identify ongoing fixed expenses like insurance, rent and bills so you can budget accordingly and comfortably cover these costs. This is also a good opportunity to check that you’re paying best-in-market rates.
4. Track variable expenses such as groceries, entertainment and transport. These discretionary expenses can add up fast, so be sure to think about any areas where you need to cut back.
5. Allocate a portion of your income to savings each pay day. You can even take the mental load out of it by setting up automatic deposits that go directly into your savings account.

Be realistic with your financial goals. Going cold turkey on non-essential spending almost never works.

Monitor and adjust your budget regularly in alignment with evolving market dynamics and major changes in your life.

Get help from the pros

Shifting your money mindset and making a whole new personal finance plan for 2024 is no walk in the park. But you don’t have to go it alone! If you’re interested in financial planning help, let us know and we can introduce you to a financial planner who can guide you in creating the right budget for you.

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Appointments with Connected Finance come to you at no cost, so you don’t have anything to lose by booking a time to chat with our team and learn more about your home loan options.