Get your finances together in 2013
Resolutions made ... This year, give yourself the gift of financial order.
A new year brings with it a host of new experiences. New milestones for your child (and you!), new goals, new dreams … and possibly even a new family member.
For around two-thirds of us, the new year also means NY resolutions, with commitments to losing weight, gaining fitness, eating better and giving up smoking the most popular vows to make.
Unfortunately, it’s thought that around 80 per cent of those resolutions end up being broken - so perhaps it’s time to change our resolutions? Let’s make 2013 the year to get your financial $*it together! Here are some tips to get you started.
Flick the plastic
The post-Christmas/stocktake sale period is a great time to take a good, hard look at how much we owe on credit. Currently, as a nation, that amount sits at $49 billion, with $36 billion of that accruing interest. And with the average credit card interest rate at around 14 per cent, that means billions of dollars in profit for the banks. That’s your money!
Paying off a credit card isn’t a short-term resolution, but getting a strategy in place to do it is the most important step. So grab a piece of paper and write down how much you owe, and how much you can realistically afford to pay off each month. It might take you a few years to achieve, but paying off your credit card can save you heaps of money in the long term.
If you want to know just how much your credit card is costing you, try the MoneySmart credit card calculator.
Hammer your home loan
Yes, your mortgage is for a worthwhile cause – but it still costs you a fortune. The good news is that Australians are turning into savers, with a recent Nielsen survey for Crown Lending finding that the number one financial goal for seven out of 10 of us is to pay off our home loans.
Paying extra onto your mortgage can save you tens of thousands of dollars – for example, an extra $100 per month onto a 30-year $300,000 mortgage at 6.5 per cent interest can save you more than $60,000 in interest costs over the life of the loan. No matter which way you look at it, that’s a fantastic saving!
Try the Money Smart mortgage calculator to work out how much your own family could save.
Be a SuperSeeker
There’s around $17 billion of lost superannuation floating around out there. Specifically, the tax office estimates that there are around 3.4 million lost super accounts with an average value of $4800. Mums, with their name changes, time out of the workforce and career changes, are particularly vulnerable to losing their super. It’s worth tracking down though: a typical 30-year-old who finds $3000 of lost superannuation now could have around $24,000 more in the bank account at retirement.
The tax office runs a free online search tool, SuperSeeker, which lets people view their active accounts, find lost super and request a transfer of funds using an online form. You’ll need your tax file number when you search.
Pay your bills on time
Yes, it sounds simple, but incurring late payment fees on credit cards, rates notices, utilities bills and so on can end up costing you hundreds of dollars (which makes it more difficult to find the money to pay the next bill on time – it’s a vicious circle!).
So file your bills in date order, and then, as soon as income goes into your or your partner’s bank account, make sure that any outstanding bills are paid off before anything else gets bought. It doesn’t always work perfectly in the months when money is tight, but it’s a great habit to get into.
With financial issues one of the top causes of relationship conflict, getting your $*it together is a great step towards a truly happy new year!
For more ideas on how to save and get in better financial shape, visit the Essential Baby money management forum.