We are marching through Spring, speedily heading towards the most expensive part of the year: Christmas and the summer break. Before you get lost in the madness likely to ensue, now is the perfect time of year to sort out your finances and learn to manage your money better.
But where do you get started? And what are the main areas to focus on when tidying up your money?
James Hand, financial adviser with Centric Wealth, says any good spring clean of finances must begin with goal setting. “Some people are saving for a house deposit, some for a holiday and others for retirement. It’s about understanding your needs and getting some advice around your goals,” he says.
Next up, it helps to understand your cash flow – do you have money left over after paying your monthly bills or do you spend more than you earn? – and setting a budget.
Steven Münchenberg, Chief Executive of the Australian Bankers’ Association (ABA), says: “Once we understand where our money goes, we can start to make changes to our spending and saving behaviour to lift our savings or reduce debts, so we can be in a better position to achieve financial and personal goals.”
Learn to love budgets
Hand suggests setting a yearly budget, setting money aside for holidays and other big purchases, and reining in any unnecessary expenses. “Look at budgets as permission to spend money, rather than restricting your spending,” he says.
Review your mortgage
“When sorting out your finance, it’s a good idea to review your mortgage and ask yourself whether you’re getting the best deal from your bank,” Hand adds. “You can also look at fixing your interest rate to help with budgeting as you’ll know how much you are paying each month.” If you feel you’re not getting the best possible deal from your lender, it’s worth comparing and shopping around for a different home loan.
Separate your savings
Opening an online high interest rate savings account is a great way to boost your savings. “Removing your savings from your everyday bank account gives you time to think about how you spend your money and can help you accumulate your savings,” says Hand.
Review your insurance plans
You can reduce your current spending by paying your insurance through your super fund. There are many benefits to this, says Hand, including gaining a tax advantage because insurance premiums are paid from your super account, not your after-tax income.
Identify lazy money
This is money spent unnecessarily and for no gain. Do you have a gym membership you don’t use? Hand advises getting rid of it and saving hundreds of dollars a year in one quick swoop. He also suggests buying a mobile phone outright rather than being on a plan, as it can save you money in the long term and allow you to pay only for what you use.