Five steps to financial success

1. Have a plan
   Most people suddenly become very effective savers when they have a clear-cut goal, whether it be an overseas holiday, a home deposit or the children's education. Setting a realistic budget and sticking to it is usually not nearly as much of a problem when you have a definite goal in mind.
   
   
2. Reduce debt
   Realistically most of us cannot live without some debt. Generally we need a mortgage to buy a home. Some of us also use debt to buy assets, such as shares, property or managed funds. Others access debt to start and build a business. This form of debt is called "good debt" because we are using it to acquire assets which will either produce income or provide us with shelter. Bad debt is consumer debt, where we use cards or other types of personal loans to buy goods, such as furniture and fashion and services, like travel and beauty treatments, which diminish rather than grow in value.
   
   
3. Build savings
   Even if it's just a small amount, regular savings build up. The easiest way to do this is to have some money diverted from your salary directly into a savings account.
   
   
4. Invest smarter
   Don't just accumulate cash savings, invest in something specific. For many starters, managed funds are the way to go. Many only require $1000 to get started and many also have regular monthly savings plans.
   
   
5. Minimise tax
   Never choose investments based solely on tax breaks. But do take advantage of all the tax breaks that are legitimately available to you, such as fully franked dividends, income splitting and super and negative gearing into quality assets.