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Three money tips for every income

Three money tips for every income

Money is tight, you’re busy and tackling money issues isn’t fun. But if you wish you could once and for all get your financial house in order, then the time to act is now.

Research by Prudential Financial revealed that less than 25 percent of us feel very well prepared to handle financial matters, while almost 80 percent think it’s very important not to become a financial burden to loved ones. But less than a quarter of us feel confident that we can pull that off – and who needs that kind of stress?

No matter how much you earn or what you do for a living, following three simple philosophies can help everyone to more effectively manage their money. Post this list on your fridge, the bathroom mirror or your desk at work and take it on in little chunks and make 2013 the year you find your financial confidence.

Tip 1: Get a grip

Ignorance is not bliss. You may be able to cite many of the big-ticket expenses in your life such as your mortgage or car loan repayments. But it’s the smaller sums of money you spend each week that can bring the most “yikes, I had no idea” moments, when you begin to track outgoing money.

First, gather all of your bank statements, credit card bills, utility bills and insurance premiums then plug these in to a budgeting tool – try the federal government’s MoneySmart website for a simple and free option, and be honest when entering the figures!

Tip 2: Limit your overheads

If you want to have money enough to pay off debt, save for the future and still have a little fun today, it’s important to limit your expenses.

Once you input your income and outflow into a budget sheet, print it out and circle every expense that is a “want”, not a need, then figure out how to reduce or eliminate it.

Then take that money and put it straight back into paying down debt, insists Alex Parsons, CEO of RateCity.

“Accelerating you your mortgage repayments and credit card repayments can potentially save you tens of thousands of dollars over the long term,” he said.

“One of the easiest ways to further save money is to compare financial products using a site like RateCity and switch to more suitable or cheaper options. Switching your home loan could free up more than $1000 per year – where else can you free up that kind of money in your budget without changing your lifestyle?”

Tip 3: Build security

When it comes to building wealth, no amount is too small to start. Whether it’s $50, $100 or $1000, every single dollar can be put to good use and, hopefully, be the start of regular disciplined program of stashing away other small lump sums.

One option is to open a high-interest online savings account to keep your savings separate, and transfer money as soon as you get paid – don’t wait until the end of the month!

Otherwise, consider paying down debts or making a personal contribution to a superannuation fund.

And finally, when building security don’t forget to protect your greatest money-earning asset – you!

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