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Key to financial success is a healthy attitude to money

OPINION

The start of a new year is a good time to take stock of your financial situation. This is a quick exercise done once a year to add up the value of your assets (house, car, bank deposits, KiwiSaver and other investments) and subtract the value of your debts (mortgage, credit cards, personal loans) will show how much your wealth is increasing from one year to the next.

There are three ways in which your wealth can increase during the course of a year; through an increase in value of assets held since the beginning of the year, through buying or investing in additional assets, and through reducing debt.

READ MORE: Money resolutions to make in 2016

The start of a new year is also the time when many people feel guilty about their wealth not growing fast enough because they haven’t saved enough or paid off debt. Each year is another chance to shift the balance between spending and saving so wealth increases. If you consistently fail to achieve the goals you set at the start of the year, it is probably because you need to change your relationship with money.

Face the reality of your situation and set realistic goals

One of the biggest mistakes people make is trying to get ahead too quickly. Money is an important part of life that serves a multitude of purposes. It is not something you can do without. For the same reason that you can’t reach your goal weight on an overnight diet or suddenly become as fit as an Olympic athlete, you can’t go from being broke to being seriously wealthy in a short space of time.

The first lesson in changing your relationship with money is to set attainable goals that reflect the reality of your current financial situation. It is better to take small steps and be successful than to set unrealistic goals and fail. Achieving small steps may give you the confidence to gradually take bigger steps. If you have never been able to save, trying saving just a small amount each week and increase the amount over time.

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