Tag Archives: Women in Finance

5 common financial mistakes to avoid during a crisis

By Robert Wright /August 07,2020/

The economic impact of the COVID-19 pandemic is playing havoc with finances for many households. In an ideal world, the financial boost should be enough and assumes that everyone was financially prepared for tough times. But in times of crisis, it can all be a little overwhelming.

Here are 5 common financial mistakes to avoid during a crisis and help you get to the other side with minimal money stress:

1. Not paying attention to the household finances

According to a study by Deloitte Access Economics, a worrying 14 per cent of Aussies struggle to pay their bills (including rent, mortgage, utilities and credit cards). The study found that 26 per cent are spending more than they earn and live from pay cheque to pay cheque. Taking time to pay a little more attention to your household budget will help you stay afloat financially and not fall into unnecessary debt.

Start by listing all discretionary spending and reduce non-essential spending as much as you can. Identify those recurring direct debits to subscription services you no longer use. Perhaps home cooking will do rather than Uber Eats. Schedule a payment plan with essential providers such as utilities and rates. Discuss holiday repayment options with your bank or landlord.

Try using a spreadsheet or budgeting app to make it easier to track your spending during this time. You’ll quickly get a true picture of your financial health.

2. Not building up emergency funds

The Deloitte study also found 13.4 million Aussies don’t have emergency savings to fall back on if they are out of a job. While we could not have predicted a pandemic, it certainly has exposed the financial vulnerability of not ‘saving for a rainy day’. A general rule of thumb is keeping aside three to six months of living expenses.

With banks letting borrowers hit pause on their home loan repayments, and as many as 375,000 individuals applying for the repayment relief, saving any excess surplus into an emergency fund to cover delayed repayments will see you in a stronger financial position.

3. Making emotional investment decisions

Share market volatility has seen global markets bounce around, resulting in lower investor confidence. With markets falling as much as 37 per cent, you may be thinking of abandoning your long-term investment strategy and cashing in your portfolio. However, share markets have proven that a recovery follows a crisis. The Global Financial Crisis of 2007 and the Black Monday Crash of 1987 are good examples. So, it makes sense to stay the course with a quality investment strategy whilst reviewing it regularly in line with financial goals.

4. Assuming your estate is in order

Half of Australians do not have a will. Of these, 34 per cent said they ‘haven’t got around to it.’ Without a valid will, your estate affairs end up in chaos. In light of the current pandemic which can have fatal consequences, setting up your estate affairs should be high on your list. A simple will can be drafted up by a lawyer for as little as the cost of smart TV.

5. Not seeking professional advice

In times of financial crisis, it might seem more affordable to take a ‘Do-It-Yourself’ approach to save on costs, rather than seek the advice of a financial advice professional. During COVID-19 crisis, the Australian Government eased the rigid regulatory requirements to allow more access to professional advice. Working alongside a subject matter expert such as a financial planner, may help you achieve a better financial outcome as well as putting your mind at rest about the future.

Source: Money and Life

Essential apps for budgeting and saving money

By Robert Wright /July 20,2020/

Determined to master your money and stick to a budget in 2020? It doesn’t have to be boring or difficult if you keep it simple, and easier still if you let technology do the heavy lifting for you.

1. Pocketbook

Pocketbook automatically organises your spending into categories like clothes, groceries and fuel, showing you where money is being spent. You can also set up budgets for each category, see your balances and view your transactions. The app ensures all your bills are automatically detected and in the one place. Plus, you get notified when bill payments are coming up and if you have enough money to cover them.

2. MoneyBrilliant

Want to have a personal financial assistant in your pocket? According to their website, that’s just what you’ll get with MoneyBrilliant. This app is similar to Pocketbook as it connects your bank accounts to help you monitor your finances. The basic version also allows you to connect your credit cards, loans, superannuation and investment accounts. Other basic features include creating budgets, getting bill notifications, categorizing expenses, working out your net worth, and generating spending reports.

With the plus plan, you get access to a whole host of other features and services. The upgrade provides alerts for better deals from service providers, recommendations for optimising your accounts and products to making your finances simpler and sorts your expenses into tax deduction categories.

 3. PocketSmith

In its basic version PocketSmith is similar to MoneyBrilliant and Pocketbook, with automatic imports of bank transactions and access to reports summarising your financial activity. It also offers features like digital and cash spending projections, calendars and a choice of either daily, weekly or monthly flexible budgeting options to suit your lifestyle and financial needs.

4. Goodbudget

If you’re a fan of the old-fashioned ways of managing your finances, this could be the app for you. And as you can’t sync it to your bank accounts, you might also prefer Goodbudget if you’re not completely comfortable with sharing bank details with an app.

Goodbudget takes the envelope system digital. Instead of dividing cash for rent, bills and savings between paper envelopes, you get to create up to 10 virtual ones with the basic version of this app. By doing this you can direct your income to where it’s needed, making sure essential expenses are covered and stopping you from overspending on extras. The Plus plan gives you access to unlimited envelopes and the ability to use the app from more devices.

 5. WiseList

With more of a focus on helping you save this app brings a couple of extra elements to managing your budget and bills. It’s designed to help you spend less on your food bills, with features for comparing product prices and getting family members working together on shopping lists.

You can also keep track of loyalty points you’re earning as you shop and plan to save even more with app notifications when your favourite products are on special. It has some handy features for keeping on top of your other bills too. Simply take a photo of each bill and the app will store all the important information and alert you before the due date.

6. Finder

Launched in 2020, the Finder app brings together the money-tracking capability seen in other apps with their well-known comparison data for financial products and services. Not only can this app sync with your bank accounts, it also gives you regular updates on your credit score and savings tips based on analysis of what you’re spending money on.

7. Beem It

An independent company backed by Commonwealth Bank, NAB and Westpac, Beem It is an Aussie version of the popular US bill-splitting app, SplitWise. With Beem It, you can take the hassle and awkwardness out of sharing expenses with friends by making it easy to calculate each person’s share and make requests for payment as well as transfers.

Source: Money and Life

Digital payments and online banking explained

By Robert Wright /June 01,2020/

Face-to-face encounters have become less frequent in so many areas of our lives – and banking and shopping are no different. So, now’s an ideal time for older Australians to start integrating more digital transactions into their everyday banking. Using these methods for the first time can be intimidating, so we’ve answered some of the key questions you might have about digital transactions and online finance.

What are contactless payments?

In the wake of the COVID-19 (Coronavirus) health crisis, many shops and businesses have moved away from cash and are accepting payment by credit or debit card only. If you go into a store to buy something, you’ll likely be asked to use the ‘contactless’ payment method. This is simply a payment that’s processed in real time by holding your debit or credit card near the card reader without the need to swipe or insert it.

Also known as Tap & Go, this method allows you to make a purchase of up to $200 (temporarily increased from the $100 pre-COVID-19 limit) by simply hovering your card above the machine – you won’t need to enter a PIN.

If your transaction is in excess of $200, you’ll need to enter a PIN. Use one hand as a barrier over the keypad to prevent anyone else seeing your pin entry.

It’s also worth mentioning that some merchants may pass on the costs they incur to use these processing systems. If you are charged, the surcharge varies between merchants. You may find you’ll have to pay a small percentage for credit and debit purchases; however, merchants will generally let you know before the transaction.

How do I pay bills online?

Generally, a bill that you’d normally pay in person or at the post office can be paid online through online banking, using the secure and safe electronic payment system of BPAY, a widely used bill payment service.

Each bill you receive has its own unique BPAY information, which is located at the bottom of the bill. To pay a bill using BPAY:

1. you’ll need to log in to your own online banking system
2. go to the section where you pay someone or transfer money
3. select BPAY as the payment method, and
4. enter the information you find on your bill.

What details do I need to give when I’m shopping online?

While older Australians are still the most likely age category to prefer paying with cash, habits are changing we’ve seen a steady and significant move to payment methods other than cash in the over-65 age group.

When you purchase something online, you’ll be asked to enter your details, including your name, address and contact details for the delivery. You’ll also be asked for the debit or credit card number that appears on the front, as well as the CVC or CVV number, which is the three-digit number printed on the back of your card or four-digit number on the front of the card above the main numbers. This is an important anti-fraud measure to ensure that only you, the card holder, can make purchases online.

As a convenient feature on your computer or mobile phone, you may be prompted with a pop-up message to save your debit and credit card details for quicker checkouts when online shopping in future. If you don’t feel comfortable storing them digitally on your computer or mobile phone, you can reject or opt out of the pop-up request.

I’ve heard that online banking and shopping can be unsafe. How can I reduce this risk?

It’s true that if you’re online, there can be a risk of online fraud and ‘phishing’. Phishing is the sending of fraudulent messages through channels such as email, social media and text messages that are designed to steal your confidential information. However, there are several steps you can take to increase the safety of your finances and details online.

• Never give out your personal information or details via email, text message or over the phone, unless you have called your financial institution directly.
• Never enter sensitive details into a website you’ve arrived at by clicking on a link, including any links you’ve received in an email or text message. In particular, you should always go directly to the website of a financial institution or online banking system, rather than via a link.
• Familiarise yourself with scams that are circulating so you can stay informed. A regular update of these appears on the Stay Smart Online website.

Looking out for fraud during COVID-19

The COVID-19 outbreak provides a further smokescreen for fraudsters. Pretending to be legitimate businesses, from charities to your local supermarket, they hope to exploit confusion and the absence of face-to-face contact to gain your money and information.

If you suspect suspicious activity online or have been contacted via email or phone by someone who you think could be running a scam, it’s important that you contact your financial institution immediately to discuss the details.

 

Source: AMP

Take stock of how much conveniences are costing you

By Robert Wright /June 01,2020/

With weeks, and perhaps months, of self-isolation ahead, many of life’s conveniences like streaming and delivery services will become our essentials. But if you’re used to spending unlimited amounts to make life that little bit easier, now is a good time to look at what you can live without to make your budget go further.

These days it’s easy to order just about anything on demand. With the tap of a button, you can stream the latest music, have food and drinks delivered to your door and choose a new outfit with next-day delivery. But convenience could be costing more than you realise, with serious consequences for your future financial security. And with the growing number of ‘set and forget’ payments for subscriptions and services consumers are often footing the bill for things even when they’re not really using them.

There are also costs to society and the environment that come with the convenience of online shopping. All that packaging and fuel consumption that comes with home deliveries can really add up to big problems for landfill and climate change.

If convenience is troubling your conscience, as well as your hip-pocket, take a closer look at these five areas where it’s easy to overdo it. Also, get these ideas on what you could do to put some sensible limits on your convenience spending.

1. Entertainment

The convenience of online streaming services has made them essential for many people looking to enjoy entertainment at home and on the go. Unfortunately, free trial periods and automated payment schedules make it easy to forget exactly what you’ve signed up for.

To get a handle on your spending, do an audit of your subscriptions. Check your bank account and credit card statements for the last three-months at least to find any automatic payments. Then select the services you want to be using in line with your entertainment budget. If you don’t have a fixed amount in your budget for entertainment, try limiting it to one service per category.

2. Food and beverages

Consumers splurge a whopping $238 a month (or nearly $60 a week) on food delivery services, research shows, with a further $140 a month on takeaway and coffees.

If you find yourself regularly turning to apps to satisfy your hunger pangs, here are some strategies you can try to limit the splurge.

• Keep healthy snacks with you to curb those cravings when they hit. Things like fresh fruit, nuts and muesli bars can help take the edge off your appetite, so you’re not tempted to hit order when you get too hungry.
• Plan your meals a couple of days in advance, so you know what you’re going to make and can have the ingredients on hand.
• Take an online cooking class. Learning a bunch of fun new recipes can make it easier to enjoy some excitement with your home cooking instead of turning to take-away to add variety to your mealtimes.

Swapping even one home-delivered meal for a home-cooked meal each week really adds up. A saving of just $40 a week would put over $2000 back in your pocket over the course of a year.

3. Transport

On demand transport apps have changed the way we travel. If you live in a big city, chances are you use apps like Uber fairly often. But since the fees come directly out of your account, you may not even realise just how much you’re spending on travel.

There’s also the environmental impact to consider. Each private trip produces much more carbon pollution than public transport. When you weigh up the true cost, is it really worth it?

The answer is simple: when social distancing rules are relaxed you can swap private rides for public transport, walking or cycling wherever you can. There are some great public transport apps around that make it quick and easy to catch a bus or train, so you can still rely on technology to make travel simple.

4. Technology

Apps, games, smartphones, tablets, eReaders… how much do you spend on technology that you don’t even use?

With many devices costing upwards of $1000, delaying that upgrade until you really need it could be a win for your pocket – and for the environment.

App subscriptions are another sneaky expense that really adds up. They may seem inexpensive and often have free trial periods, so it’s really easy to forget what you actually end up paying for. Check your subscription list at least once a month and delete anything you don’t need. Your bank balance will thank you.

5. Easy payment services

Buy now, pay later (BNPL) arrangements have exploded onto the scene in recent years as a popular way to finance a variety of purchases. Figures show that 30% of Aussies have at least one BNPL account, spending around $7 billion a year. Most of that is going on fashion, followed by appliances, entertainment, food and drinks.

But there’s evidence that BNPL services lead to overspending. A full 60% of BNPL users surveyed by Mozo reported purchasing things they normally wouldn’t, thanks to the easy payment instalments.

If this sounds like you, it might be time to step away from Afterpay, Zip and other BNPL services and get back to good old-fashioned saving in order to get what you need.

 

Source: Money and Life