As the new financial year draws near, it's the perfect time to take a fresh look at your financial fitness and set goals to get your finances in better shape.
Just like physical fitness relies on eating well and exercise, your financial fitness depends on making positive steps in the right direction. The experts at industry super fund−owned bank ME, have put together these 8 top tips to get you started on your financial fitness journey.
1. Weigh up your situation
To begin with, track your income and what you spend your money on. Your bank statements are often a good place to start − most online banking platforms allow customers to export transactional data into an excel sheet or other analysis programs. You can then categorise your expenses into mandatory and discretionary spending − this will allow you to make informed decisions on your budget and identify your savings potential.
2. Set goals
Next, work out what your priorities are. Write down your goals, being specific and realistic about what you want to achieve. Know exactly how much you want to save and by when. Start by setting big, long-term goals, like buying a home, saving for a wedding, or your retirement. Then, set smaller goals to help reach those big ticket items, like taking your lunch to work every day or having a movie night at home instead of going to the cinema.
3. Cut the fat
Being weighed down by your credit card debt can be detrimental to your savings and cause unnecessary stress. Credit cards are one of the most expensive types of credit available with rates topping 17 per cent per annum for some cards. That means for an average card balance of around $3,000, annual interest charges could top $510 – that’s a huge chunk of cash that could be sitting in your savings instead. Switching that balance to a low-rate card could see you save on interest in the first year alone, freeing up extra cash for additional repayments.
4. Keep it streamlined
Juggling multiple debts can be stressful and costly. If you’re struggling to keep track of your debts, it’s a good idea to consolidate debt into a single personal loan. It means one set of paperwork, one monthly repayment, and with a lower rate you have the opportunity to save on overall interest costs.
5. Grow your savings
Next, open a dedicated high-interest savings account to give your savings the benefit of healthy interest returns, and the added advantage of being separate to your everyday transaction account. It’s estimated Australians collectively have around $209 billion sitting in low-interest accounts. This highlights the importance of keeping tabs on the rate your money is earning. Consider looking for savings accounts with high interest rates and longer bonus periods, or avoid bonus-based savings products altogether and choose one paying a consistently strong rate.
6. Stay focused
Without constant reminders, you may lose sight of your financial goals which makes it hard to stay motivated. A great way to keep focused is to have pictures of your goals everywhere. Post them on your fridge, in your wardrobe, or as a backdrop on your smart phone. The more you visualise your goals, the faster you will see results.
7. Reward yourself
Making sacrifices to your lifestyle to save money can be challenging, but that doesn’t mean it shouldn’t be rewarding. Watching your savings account steadily increase is exciting, but you should also reward yourself for staying disciplined. Inexpensive rewards could include shouting yourself lunch every Friday if you make your lunch from home every other day, or treating yourself to a manicure if you saved more than you budgeted for that week.
8. Get a trainer
Engage with your bank to help you achieve your peak financial fitness. Having a discussion about the right financial products to suit your lifestyle and achieve your goals is time well spent. With the right support and the right banking products, you can fast-track your financial goals to achieve ultimate financial fitness.
For more info on keeping your personal finances in shape, visit mebank.com.au