Top Tips for Managing Your Finances
Top tips are a positive way to help you get a hold of your finances easily. This blog is part of our series on ‘why managing cash flow doesn’t have to be an extreme sport’. Here are our top tips to feel that you have everything under control.
- Track you monthly spending
Many people do not know how much they spend each month of food, clothing, housing or entertainment. Whether you are paying with cash, a debit card or credit card, total your expenditures at the end of the month to gain a better picture of how you’re spending your income.
- Develop a household budget you can follow
Using the data you’ve compiled by tracking your monthly expenses, develop a realistic budget so that it’s easier live with. Track how well you follow it each month – that means continuing to track your monthly expenses.
- Be sure to budget for savings
Your savings are a Rainy Day Fund, which is important when unforeseen expenses or emergencies arise. Be sure to budget part of your monthly pay for deposit into a savings account – ideally at least 10% if each pay. If you find or earn extra money – put that away in a savings account too!
- Pay your monthly bills on time and avoid late charges
Take inventory of your regular monthly bills and make reminders for yourself on when each bill is due. That way you can avoid costly late fees, which can also damage your credit score. The best approach is to pay bills as soon as they arrive.
- Review your credit report
The details of your credit report can have an enormous impact on your financial future. You can obtain a free report once a year and check it for accuracy. Be sure to dispute any errors. Reports can be obtained from:
Veda Advantage veda.com.au 1300 762 207
Dun and Bradstreet dnb.com.au 13 23 33
Experian experian.com.au 1300 783 684
- Obtain your credit score
Your credit score tells lenders and businesses how well you manage your credit and your finances. Score range between 0-1200. The higher the number, the better the rating and the better chance you have of obtaining credit at a better rate. You can obtain your credit score at:
- Eliminate credit card debt
Credit cards can make it easy to pile on debt. If your debt adds up faster than you can pay it off, you’re likely to be living beyond your means. Stop using the credit cards and pay of existing balances – the sooner you do, the less you’ll pay in interest. Remember: not all debt is bad; taking on loans for higher education or to buy a home is really an investment in your future.
- Take advantage of free money
If your employer offers a contribution match for superannuation, be sure that you’re contributing enough to obtain the maximum match amount. Otherwise, you’re missing an opportunity for free money. Maximising your contributions can lower your taxable income.
- Assess your insurance policies
Insurance is an important tool for protecting against financial hardships, and the premiums you pay can be one of your top household expenses. Talk with your provider to be sure you have the appropriate level of protection – that way, you’re not paying too much for coverage.
- Use legitimate financial institutions
Millions of people do not rely on traditional banks or financial institutions to manage their money. Open a check or savings account at a reputable bank, building society or credit union. Be sure to research whether there are any fees for their services before choosing an institution.