Budgeting
We all know we should have a budget (which includes savings) but not many do. Thankfully there are now loads of apps, some free, that can help you do this. So, whether you need to adjust to a lower income level or you just need to start budgeting, here are my picks:Pocketbook is my favourite and it’s free. It links up to your bank accounts and credit cards so you can easily see where all your money is going and set saving goals.The Money Smart government website also has some good free budgeting tools (and many other financial tools, tips and advice) available to you.
Saving
How much should you be saving? That is a hard question to answer as it depends on so many factors - employment, debt levels, short and long term goals and timeframes/life stage. However in saying that here are a couple of budgeting models.Subscription Audit
There is an old fable that says if a frog is put suddenly into boiling water, it will jump out, but if the frog is put in warm water which is then brought to a boil slowly, it will not perceive the danger and will be cooked to death. Extreme example I know but this is effectively what happens with all the subscription services we sign up to. We don’t really feel the $10 a month here or there for Netflix or Spotify but then you add on the Foxtel Now subscription from when you signed up to for the free trial to Watch Game of Thrones but then never cancelled, your gym membership (would you believe Australians have around $1.8billion dollars’ worth of unused gym memberships according to the Uno Household Financial Waste Report July 2019), a $5 photo editing app for the Gram, your wine subscription (which to be fair is pretty much a basic need) and the next thing you know your subscriptions are costing you $1000’s per year! It is worth conducting a subscription audit and cancelling anything you don’t think you need.
Debt Audit
Most people don’t know what interest rate they pay on their credit cards, personal loans and mortgages which means this is your ‘low hanging fruit’ or easy win in terms of saving money. According to the same Uno Household Financial Waste Report July 2019, Aussies waste $4.2b on mortgage interest they are unnecessarily paying (i.e. they are on a higher interest rate then they should be because they haven’t reviewed their mortgage) and $621m on credit card interest. Your broker will be able to help you with all of this so you don’t even need to do it yourself - easy!
Balance Transfer (BT)
You will see many lenders advertise a tempting 0% BT offer but unless you are extremely disciplined and use the 0% period to knock down the debt, you will likely be in the same position you started in (not to mention the annual fee or once off transfer fee they will have charged you). The other scenario we see all the time (if this is you, you are definitely not the only one) is people go through with the BT but don’t close the original card. The original card becomes too tempting and before you know it that one has crept back up to the limit and you end up in a worse position.
Debt Consolidation
Depending on how much unsecured debt you have you could consolidate it all into a single loan. In most circumstances, especially if you are consolidating credit cards, this will save you a ton of interest. Some lenders will offer you a reduced interest rate (and a higher maximum loan amount) if you can offer them your vehicle as security.Home Loan Refinance
I’m sure anyone who has a home loan knows they have the option of refinancing but many feel like it’s too much effort to go through the process. Yes, you will be asked to provide bank statements, payslips and various other documents but ten minutes taken to do this could save you thousands!
Unclaimed Money
This is a fun one! Unclaimed money is money from lost bank accounts, shares, investments and life insurance policies. This money becomes lost when you move house and forget to update your details with a financial institution or company. There is around $1.1 billion in lost shares, bank accounts and life insurance so follow this link to see if any of this is yours!