Tag Archives: Budgetting

Five Financial habits to start

By Robert Wright /April 16,2021/

Like any habit, our financial behaviours are formed by doing the same actions repeatedly until they’re second nature. That’s great if you’ve got into the routine of saving regularly – but not so good if you’re one to whip out the credit card on impulse.

With the right approach, you can turn those less-than-helpful financial habits into healthy behaviours.

Research shows one way to avoid falling back into old ways is to replace them with healthier habits. Other useful strategies include:

• Making smaller changes rather than big, dramatic ones.
• Choosing specific actions like ‘I’m going to transfer $100 into a dedicated savings account every fortnight’ rather than vague goals, such as ‘I want to feel financially secure’.
• Triggering new behaviours with visual or sound cues – that’s why social media with its notifications can be so habit-forming.

Here’s how to use those strategies to set you up for a financially successful 2021.

1. It’s time to get organised

Knowing where you are financially gives you clarity around your money. This makes it easier to workout your financial goals – and what you need to meet them.

Start by having a place for everything. If you receive your bills electronically, save them in one place. Scan any other financial paperwork – or set up a folder if you prefer hard copies. Consider setting up direct debits or create calendar alerts to ensure you pay bills on time – and avoid late payment fees forever.

You can’t control your money if you have no idea where it’s going or how much is coming in. Using a budgeting app can help you easily track your expenses and get an accurate record of your monthly spend. You can use this information to create a realistic budget. You can also use your bank’s app to manage your day-to-day expenses and check your balance.

Don’t forget to record expenses as you go and photograph or scan receipts, so when tax time comes, you’ll have all the documents you need in one place.

2. Name your goals – And break them down into steps

What are your financial goals? Some common ones include:

• Buying a property or starting a business
• Going on a dream holiday
• Paying for the kids’ or grandkids’ education
• Leaving money for loved ones
• Retiring early
• Being free from debt/paying off the mortgage

Enjoying financial freedom. Once you know what your goals are, break them down into small, actionable steps. For example, say your goal is to buy a property. Work out first how much your ideal home will cost, how much you’ll need for a deposit and when you hope to purchase it. Next, decide how much you’ll need to set aside each fortnight for that goal. Don’t forget other sources of income that could add to your savings – like a tax return, bonus, or income from a second job.

3. Pay yourself first

One of the most important financial behaviours you can develop is the habit of saving regularly. You need some savings as a safety net – covering unexpected expenses like home or car repairs, or a trip to the dentist. You can then use additional savings to cover your financial goals, or to invest in assets like shares or property.

One of world’s most successful investors, Warren Buffett offers this advice on saving: “Don’t save what is left after spending; spend what is left after saving.” In other words, pay yourself first.

One way to do this is to automatically transfer a regular amount into a savings account each pay day. By taking the same amount out at the beginning of the pay cycle, you’ll get used to not having it. If money is tight, make the amount small.

Check the balance of your savings account regularly. This will give you the visual reward of seeing your savings account grow – helping motivate you to stay on track.

4. Set a debt repayment strategy

If you have credit card debt, try to pay off as much as you can each month. Make sure it’s more than the minimum, or you could end up paying a lot of money in interest.

If you have multiple debts, they may be easier to manage by consolidating them into one debt. Alternatively, pay off the debt with the highest interest rate first. Some people find paying off the smallest debt first, then moving onto the next smallest debt more motivating.

To avoid getting into more debt, try to avoid impulse buying. Consider having a credit card for emergencies only and relying on your everyday account to pay for groceries and other expenses. Even better, build up a rainy-day account and avoid credit cards altogether.

5. It’s never too late to learn

Do you find finances confusing, boring or stressful? Learning more about finances can take the hard work and mystery out of managing money.

Source: Colonial First State 

Budgeting tips for students

By Robert Wright /April 16,2021/

Surviving on a student budget isn’t easy, but don’t worry, it can be done. Whether you’re studying remotely this year, or returning to campus, we have some great tips to help you manage your finances.

Create a budget (and stick to it)

No matter what your income, having a budget is the first step towards financial wellbeing. It’s even more important when you have limited resources, so you can avoid overspending.

Not sure how to create a budget? Start by recording your income and spending in a budget planner or spreadsheet. Try to use the most recent figures you can find, taken from your latest utility bills, bank statements and tax returns.

What does your budget tell you? Does your income cover your essential expenses? Are there areas where you need to cut back? Revise the figures until you’re comfortable you’ll be able to make ends meet.

Avoid overspending

Now that you know what you can afford to spend, it’s important to stay within your budget.

If you do find yourself spending more each week than you have coming in, don’t be tempted to use credit as a bridge. Trying to cover your spending gap with a credit card can lead to a lifetime of consumer debt that’s hard to shift.

Get thrifty with your shopping

With so many ways to save on shopping, you need never pay full price again.
Here’s just a few ideas:

• You can find almost anything on second-hand marketplaces like Gumtree, eBay, and Facebook Marketplace. Second-hand doesn’t always mean ‘worn’ either. You can often pick-up items in excellent condition that no longer suit their original owner.
• New textbooks can be very expensive, so buy second-hand, or check whether there’s an online version available through your library.
• You can often find a better price just by shopping around online. Black Friday sales are another great time to save on bigger purchases. Just make sure to look out for any hidden fees, like shipping charges.
• Never use Buy Now, Pay Later services. This form of debt can become hard to pay back if you overspend.

A (cheap) place to call home

A good home life can really make or break your student experience. It’s also one of your biggest expenses, so weigh-up what’s most important to you and what you’re willing to sacrifice. For example, you might find that living closer to campus is more expensive but cuts down on your transport costs. Or, you may be able to find cheaper accommodation further out, with a longer commute. House sharing websites and student accommodation providers are a good place to start looking for affordable options.

Plan and prep your own meals

If last year’s lockdown/s taught us anything, it’s that eating at home is a big money saver! While it might be tempting to grab a takeout for lunch or dinner, the cost of eating out quickly adds up. Get Googling for some delicious low-cost recipes and plan out your meals for the week. Then invite a few friends around and swap that pub meal for some tasty home cooking.

Negotiate a better rate

Did you know you can often get a better deal, simply by asking? It’s possible to negotiate a better rate on just about anything these days, from your phone or internet bill to electricity and subscription services. Some providers will even offer special rates or discounts for students. So, pick up the phone and get dialling.

Financial assistance

Finally, it goes without saying that you need to make the most of any financial assistance you’re eligible for. That could be government support, student loans or scholarships (they’re not just for the high achievers after all).

Living on a student budget means being realistic about what you can afford. Just remember that it’s not forever and one day soon all your hard work will be worth it. Developing good spending habits now will go a long way to setting you up for a future of financial freedom.

Source: Money and Life

Show your finances some self-love

By Robert Wright /April 16,2021/

Show your finances some self-love

Are you guilty of changing your spending habits when you’re in a relationship? Do you have a financial plan, or are you relying on a partner to take care of you in retirement? Whatever your situation, there’s never been a better time to step up and take charge of your finances.

Your relationship status can have a big impact on your finances. From spending and managing your money, to the types of investments and purchases you make, romantic partners are a big influence.

Some of life’s biggest financial decisions are made together with a partner. Moving in together, buying a house and having children are all big triggers for differences in your spending habits to crop up.

Whatever your relationship status, the most important thing is to make sure your finances are sound for you. This is especially true for women, who face extra hurdles to financial freedom. On average, women retire with 47 per cent less super than men, so it pays to have a clear financial plan.

When spending habits don’t align

Do you splash your cash on everything you desire, while your partner steadily saves for a rainy day? Or vice versa? When spending habits don’t align, it can cause tension in a relationship. One study found that finances were a contributing factor in 42 per cent of divorces and separations.

Lying about your spending might feel tempting when you and your partner have different attitudes to money. But it’s likely to lead to a loss of trust, and eventually relationship breakdown. Financial infidelity is on the rise however, with one-in-three adults admitting to hiding purchases, bank accounts, bills, or cash from their partner.

How to get on the same page

The best way to get in front of these issues is to talk about your finances early on. Having open and honest conversations about your attitudes to money, your financial goals and what you expect from each other will help build a strong foundation for your relationship and your finances.

It’s quite likely that you won’t be in the same financial situation as your partner, so talk through things like your:

• Income
• Expenses
• Assets and investments
• Any debts or loan repayments you may have
• Your individual and shared financial goals – and how you’ll reach them.

Being honest from the outset also means not overspending to impress a potential partner. Splitting bills 50/50 can be a good way to keep the relationship equal and ensure both parties feel empowered. Just keep in mind that one partner may have less disposable income than the other, or more expenses to cover. Tailor your spending so that you both feel comfortable and can meet your other financial obligations.

Dealing with debt

It’s likely that you’ll need to borrow money at some stage of life. In fact, nearly two-thirds of working Australians have some form of consumer debt outside of a home loan.

If you’re in a relationship, be careful about taking out credit cards or loans in both your names. Understand that if you do, you’re both responsible for repaying the debt. In many cases, if the lender can’t recover the loan from one party, they’re entitled to recover it from the other. Any default on your payments will affect both your credit scores.

If your partner has a large debt, or is unable to access credit for any reason, don’t offer to obtain credit on their behalf. Never personally guarantee someone else’s debt or take on any loans or credit cards to help clear their debt.

There may be other ways you can support your partner while they’re repaying the debt, such as contributing more to household bills and expenses for a time. Encourage them to repay the debt themselves and keep them accountable. You want to see clear progress towards paying off the debt, as it shows their money management skills – and that they take the issue as seriously as you do.

Source: Money and Life

14 money mistakes to avoid in your younger years

By Robert Wright /February 04,2021/

Here’s a list of things you could stop doing if you no longer want to rely on the bank of mum and dad, or that credit card.

Going without a budget

If you’re looking for somewhere to start when it comes to creating a budget, jot down what money is coming in, what cash is required to cover the bills and any loans you’re paying off, and what might be leftover to split between savings and the fun stuff. This will help you identify where there’s room for movement and where you could be cutting back.

Using your credit card for everything

Credit cards are convenient, but they’re often more expensive than other forms of credit as they usually charge higher interest rates which means you could end up paying back a lot more than what you initially borrowed.

Keeping up with the Joneses

The pressure to stay up to date with your peers and even celebrities can be a subconscious but very real motivation behind some of your poor financial decisions. Try to live within your means, stick to realistic goals, and when you’re looking to make a purchase, ask yourself if it’s something you really need or if it’s something you simply want this week.

Borrowing money from those nearest and dearest

When you’re in a bind you may be tempted to ask your folks or bestie for a cash hand-out but remember it could put some strain on the relationship, particularly if it becomes a regular thing.

Buying or taking a loan out on a pricey car

The purchase price of a new car is one thing but remember added costs (such as insurance, rego, petrol and regular servicing) are another.

Pursuing higher education without a plan

While it’s possible that tertiary qualifications could increase your employment opportunities and potentially help you to earn more over the course of your career it’s also not guaranteed. With that in mind, it’s worth asking yourself whether the field you want to enter requires tertiary qualifications. After all, if you can get where you want through alternative routes, these may be worth exploring, particularly with the average debt for a tertiary student in Australia about $19,1003.

Quitting your job after a bad day

You may not like where you work but if you’re planning your exit march it’s wise to have another gig lined up, as it could be months before you find another opportunity and have cash coming in again.

Not prioritising what you really want to do in life

The benefits of thinking ahead when it comes to what you want are pretty clear. For instance, buying a car, going on holiday and moving into a new apartment all within a six-month period mightn’t be financially doable, but if you spread those things out they might be.

Saying ‘whatever’ to an emergency fund

Only one in four Aussies has savings to stay afloat when faced with unforeseen circumstances. And you don’t want a busted phone or car tyre, let alone a bad landlord or lover, leaving you financially stranded. An emergency stash of cash could give you some peace of mind and reduce the need to apply for a loan or ask someone you know for a handout.

Avoiding the money talk with your partner

Nearly one in three Australians in a relationship claims they fight about money at least once a month. So, before you set up joint accounts or make a big purchase together, think about how you’ll both contribute. And if you’re planning on moving in with that special someone, make sure you’re also across what happens to your finances if you split up with a de facto.

Spending a fortune on the wedding

The average wedding today costs around $36,200, with 60% taking out a loan and 18% using their credit card. To avoid blowing your budget, start saving, talk to your partner (and parents if they’re involved), write down what you can afford, get quotes, and look at how many and who’ll be on your guest list early.

Being blasé about protection

There will be people who’ll inevitably suffer from an unforeseen event that will leave them incapable of working at some point in their lifetime. While you may choose to go without insurance to save money, for a number of people it may be affordable through monthly premiums or paying out of their super money, but do your research.

Choosing a property that’s not within your means

Whether you’re renting or buying, it’s important to think about the upfront and ongoing costs involved, and the location you’re looking at as different suburbs come with different price tags.

If home ownership is on the cards, get a full run-down of the costs you’re likely to come across.

Not caring about your future self

It might seem like a lifetime away but with some people looking at a retirement of 20 years or more (and the Age Pension alone unlikely to be enough to support a comfortable lifestyle), putting money into super may be worth thinking about while you still have time on your side.

Source: AMP