August 2008
We are only one month into the new financial year and I have already over spent! I’m still reeling from the sales so now is the time to stop and review my personal finances and look at that most hideous of all things… my household budget. Historically my budget has simply been an effective way of me feeling guilty both before and after I spend any money. With this in mind, it is definitely time to cover a few tips for the financial year.
Put a savings plan into place. If you aren’t clearing debts and don’t have a home loan, it is a great idea to try and save a little of your hard earned pay. Having a regular fixed component of your salary paid into a dedicated savings account each pay cycle can be a great way to start. For many people the simple fact they can’t see it in their day to day account is enough to ensure they don’t spend it. After all, you can’t miss what you don’t have! Also enquire at your bank about high interest savings accounts. There are now dozens of these accounts available which might give you a boost.
Review all of your debts. Check the details of your home loans, personal loans, credit cards and leases. It never ceases to amaze me how many people have no idea what their rates or repayments are! Finance products are changing all the time. Regardless of whether interest rates are high or low, a good mortgage broker can be one of your best financial buddies. They will have heaps of options and best of all their service is free. By checking the rates and the fees on your mortgage, a simple refinance could potentially save you thousands!
Loose the credit cards and personal loans, these things are expensive. Consolidating them into the mortgage can be a quick way of resolving them. This will free up extra money for your day to day budget, but don’t fritter it away. Try making additional lump some repayments on the mortgage or simply devoting some of the new cash to increasing your mortgage repayments. More often than not this will provide you with the greatest saving and over time may help you build wealth or equity in your property.
Create a budget. I know this seems obvious and boring. Budgets often fail because people have unrealistic expectations of what they can achieve and are disappointed when they realise this isn’t the case. Monitor your expense over a couple of months and record what you spend. Make sure you collect receipts (you’ll need them for tax time anyway) and actually write it all down. You’ll see a pattern emerge and soon see where you’ll be able to bring the expenses down. Remember budgets let us know what we can’t afford this alone won’t stop us buying it! So a realistic budget will be easier to stick to. You can’t complain you don’t know where your money goes if you are the only one who spends it.
Evan Davis
