One of the silver linings to emerge from the pandemic is how it’s made people more aware of their spending habits. To start the new year off on the right foot, here’s how to be more money savvy this year.
Start tracking your spending
Most of us have a general idea where our money goes, like how much you spend on rent and food every week, but I bet here are transactions coming out that you may not even be aware of. Pouring over your bank statements is kind of old school these days, not to mention time-consuming, but there are easier ways to track your spending. Pick the right bank – like Macquarie Bank for instance – and they may actually do it automatically for you right on your mobile banking; or some Apps like Pocketbook and MoneyBrilliant will sync with your bank account and automatically track and categorise your expenses for you so you can easily see where your money is going.
Seeing how much you’re spending can be really confronting, but it’s often the kick up the butt you need to get your money organised.
Get on top of your budget
Don’t have a budget yet? You’re not along.
Over a quarter of Australians don’t have a budget, according to a survey by MyState Bank, so don’t feel too bad. Many of us prefer to wing it when it comes to budgeting and think we can figure out our spending/saving on the fly. Naturally, this approach hardly ever works. If you’ve been tracking your spending, you can easily see where you need to cut down on any expenses, like all those forgotten subscriptions.
It’s important to set realistic, achievable goals when budgeting
That might be putting $100 away each pay or cutting up the credit card and paying $100 more off your balance each pay.
Split up your financial goals into short-term and long-term. Short-term goals are achievable within six months to a year, and long-term anything longer than a year.
It may even help to nickname your bank account with the name of your goal such as ‘House Deposit’ to inspire you and ensure you think twice before taking money from it.
The trick to saving money is to be more specific about what you want to save and why. Many of us start the new year with the goal to simply save more money, however, the ambiguity of this goal can see it fall by the wayside after the first few months of the year has passed. Translate your goal from “I want to save more money this year” to “I want to save $5,000 by October.”
Science shows many of us are much more likely to be successful in keeping a financial resolution if we have a clear ‘why’ – what’s in it for you. For instance, if is important to know the motivation behind your saying $5,000 – from funding a dream wedding to a dream home.
Spring clean your subscriptions
Once you start tracking your spending you can’t help but see all your big money wasters, such as weekly (or triweekly!) Uber Eats habit. Don’t overlook small transactions either because they all add up.
Dump your debt
Paying off interest-accruing debt is high on Australians’ list of new year money resolutions, with one in five planning to pay off their mortgage faster.
Meanwhile, 17% of consumers resolved to tackle credit card and personal loan debt.
Maybe you racked up a whole lot of credit card debt buying Christmas presents or you’ve got a car loan you want to finally pay off. Whatever it is, this is the time to write down all of your debts: what do you owe, who do you owe, what interest rate you’re being charged, and when it’s due. Then you want to create a plan to manage the debt.
Focusing on the smallest debts can give you a sense of achievement and keep you motivated. Then once that card is paid off, close it, then add the amount you were paying on that first one to the second card – this will accelerate the repayments of the second card. Pay off then repeat.
The longer you hold onto your debt, the more the interest stacks up which eats into the amount you could be saving for other things. Even just contributing an extra $50 to your debt payments every week can save thousands over the life of the debt.
Have ‘no spend’ days
From food and alcohol delivery to streaming services and rideshare, it’s so easy to spend money these days without even thinking about it. Try having at least one day a week where you commit to spending nothing- be it cash, debit or credit.
If that’s too hard, try only spending with cash rather than by card where you can. Physically parting with $50 feels way more painful than mindlessly tapping your card and it will make you think twice before you spend.
Refinance your home loan
If you put refinancing in the too-hard basket last year, now is the perfect time to do it. With interest rates still so low, it is time to act before they start increasing. With the lowest official cash rate on record, home loan interest rates well below 2%, and very competitive deals on offer, refinancing your home loan should be high on your to-do list… so reach out to us today on how we can help!!
We’re excited to see the things you will achieve this 2022!!
New Year financial resolutions
