Start 2021 with a financial checkup

Start 2021 with a financial checkup

New year, new you, new focus on financial health. Here are a few ways you could look into getting your finances in order in 2021, or in the years to come.

Compare your income to your expenses

Haven’t made a household budget? This could be a good place to start.

Add up how much money you’re taking home on a regular basis, both from your job and from any side projects you may have on the boil. Look at your income per month, and per year.

Then, look at all of your regular expenses – bills, ongoing charges, rent, mortgage payments and more. Again, look at these both per year and per month.

When you compare your monthly income to your monthly expenses, ideally look to see a positive number on the income side at the end. If you’re spending more than you’re earning, you’re putting your finances at risk.

Check to see if there are any recurring expenses in your household budget that you could reduce or cut out altogether to help relieve your budget a little.

Compare insurance cover

Do you have insurance policies in place to help protect your home and contents, your car, or your health? You may be able to get a similar level of coverage while paying less – all you have to do is compare a few different insurance offers.

Keep in mind that some insurances are required in certain financial situations. For example, your car likely requires Compulsory Third Party (CTP) insurance, and if you have a home loan, you may be required to hold a home insurance policy to meet your mortgage lender’s eligibility requirements.

In other cases, you may consider insurance to be an optional expense. If you choose not to take out insurance, you may also want to consider keeping some money aside in case of emergencies.

How’s your super?

It’s easy to forget about your superannuation – after all, you’re not likely to see a benefit from it until you retire, so why would you think too hard about it today?

However, the choices you make about your super today can affect your retirement in the future. If the money in your super fund gets eaten up by fees, or doesn’t earn the returns you were expecting, you may find that you’re more reliant on an age pension when you leave the workforce.

If you haven’t done so already, it’s often worth looking into consolidating multiple super funds into a single account, so you can minimise the fees you’re paying, and reduce your risk of ending up with lost super. You can also compare super funds to look for an option that best suits your needs and financial situation.

Managing debts

Do you have a home loan or a car loan? How about a personal loan or a credit card with an outstanding balance? While some debt may be useful in the right circumstances to help achieve your goals, there’s a risk that too much debt could end up being a drain on your budget and put you into financial stress.

Consider whether you can afford to make extra repayments towards your debts to help clear them sooner, reducing the total interest you’ll pay. One option could be to consolidate multiple small debts into a single loan, so there’s just one interest charge and one payment to manage. Keep in mind that you could still end up paying more total interest on your debts if you consolidate them into a loan with a longer term, even if the interest rate is lower.

You may also be able to refinance certain debts, such as switching your home loan to another lender with a lower interest rate. For credit cards with outstanding balances, you may be able to switch to a balance transfer credit card with a 0 per cent interest offer to quickly clear your outstanding balance before it has a chance to build up interest charges. Just keep in mind that you’ll be charged interest at the full revert rate once the interest-free offer expires.

Seek more advice

While these general tips can be helpful, they may not all apply to your specific circumstances. To get a better idea of what you can do with your money in the new year, consider making an appointment with a financial adviser and/or a mortgage broker. These professionals can look at your finances and make recommendations that are specific to your circumstances, helping you manage your money with new confidence in 2021 and beyond.

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Learn more about bank accounts

Can foreigners open bank account in Australia?

If you’re migrating, studying or working in Australia, you’ll be pleased to know that you can open an Australian bank account. For the most part, opening a bank account in Australia is a simple process which starts by comparing the types of bank accounts foreigners can open in Australia.

Once you’ve found a bank account that suits your needs, you can start the application process.

When you apply for the account, you’ll need to provide proof of ID which may include your passport, overseas ID or credit card. You may also need to provide a copy of your visa and proof of address in Australia.

Depending on the bank and the type of account you choose, you may be able to apply for the account online or over the phone before you arrive in Australia.

Can I close a bank account with pending transactions?

You can close a bank account with pending transactions. But after the account is closed, any incoming transactions will be declined by your (old) bank.

The best way to ensure this doesn’t occur is to either wait to close your account until all pending transactions are complete, or contact the creditor and supply them with alternate bank details.

If you’re unsure whether you have any scheduled transactions, you can speak to a banking representative over the phone or via online support.

In most cases, your bank withholds the amount owing for pending transactions (such as online purchases).

Because the pending amount is deducted from your bank balance, you can close your bank account and the purchase will be honoured.

How can I deposit cash into my bank account?

The traditional way to deposit cash into your bank account is to go to a branch and give it to a teller. These days, many banks will allow you to make deposits through an ATM as well.

Can I set up a bank account online?

Most Australia-based lenders will allow you to set up a bank account online. Requirements vary from lender to lender, but you will probably need to provide a passport or birth certificate, as well as a driver’s licence, Medicare card or another form of secondary ID.

How can I wire money to a bank account?

You can wire money to an Australian bank account either through your own bank or by using a money transfer company such as Western Union or MoneyGram. Either way, you’ll need the other person’s name, BSB number and account number. If you use a money transfer company, you might also need to provide the recipient’s address for large payments.

Can you get a payday loan without a bank account?

Yes. Some payday lenders are willing to transfer loans to prepaid debit cards instead of bank accounts.

Can the government take your money from your bank account?

There are some instances when the government can take money from your bank account. This generally occurs in situations where you have an outstanding government debt.

Before it can take money from your bank account, the government authority owed money would first need to issue a garnishee notice. 

A garnishee notice is issued by the government agency (such as Centrelink or the ATO) to a third party that holds money for you or owes you money.

To take money from your bank account, your bank would be issued with the garnishee notice requiring it to pay ‘your money’ to the requesting agency to satisfy the debt.

How do I close my bank account online?

You can usually easily open a bank account online, but you often can’t close it online.

Many banks and credit unions will only let you close an account if you go into a branch or call them on the phone.

However, some banks will let you request to close the account via your internet banking. Check your financial provider’s website for details.

Just remember: If you still have funds in the bank account, transfer them to another account, or withdraw the cash. Also, if you have any payments like direct debits going in or out of the bank account, these will also stop when you close your account.

Can debt collectors take money out of your bank account?

Many people find themselves struggling to cope with debt at one time or another. In these cases, a debt collector could contact you to demand payment for a debt, to explain the consequences of you failing to pay a debt, or to organise alternative payment arrangements.

If you’re contacted by a debt collector, you may be wondering what their rights are and whether they can take money out of your bank account.

Creditors cannot access money in your bank account unless a court order (also known as a ‘garnishee order’) is made to allow creditors to recover debt by taking money from your bank account or salary.

If this happens, the creditor can take money out of your bank account unless you pay the debt in full or make an alternative payment arrangement such as paying in instalments through the court.

How do you open a bank account under 18?

If you’re under 18 and you want to open an Australian bank account, you will need your passport or birth certificate. (Some lenders might require just a Medicare card or driver’s licence.) You can apply online or at a branch. If you’re 13 or under, you will probably need a parent to accompany you to a branch.

Can I have a PayPal account without a bank account?

You don’t need a bank account to send or receive money through PayPal. However, you do need a bank account if you want to withdraw money from your PayPal account.

Can a debt collector garnish my bank account?

A debt collector can garnish your bank account, but only with a court order. This drastic action is usually taken only if you’ve ignored several notices asking you to pay the debt.

If this happens, there is nothing you can do to stop it other than immediately pay back your what you owe in full or make arrangements to pay it off in installments.

Once a garnishee order is issued, your bank will put a freeze on your account as it processes the order. This usually takes two to three days and you won’t be able to access any of your money during this time.

If you have Centrelink payments, they may be protected, depending on what the court order says.

How do I transfer money from Paypal to my bank account?

Transferring cash from Paypal into your bank account is simple…if you have a Paypal account that is.

Once you’re logged into your Paypal account, the account balance will appear on your home page. Below your balance are two options:

  • Add money
  • Withdraw money

Choose option two if you want to transfer money from your Paypal account to your personal bank account.

The next screen will prompt you to either enter new bank account details or choose a bank account that’s connected to Paypal. You can always add more bank accounts to your Paypal profile.

Another way to transfer out of Paypal is by jumping to the wallet tab on the top menu, and clicking ‘transfer money’. Both options will give you the same result.

How do you find a bank account number by name?

For privacy reasons, Australian banks won’t hand out account numbers or other details about their customers. However, if you provide a bank with a BSB and account number, they should be able to confirm if those numbers belong to one of their customers.