Many of us have had years of experience managing our finances, but it’s never too late to hone our skills and learn new ways to have more control over our money.
Use a budget
Tracking your expenses over a few months will help you begin to see where you are spending your money. Once you have an idea of how much you are spending on things like food, accommodation, entertainment and similar expenses, you can start making decisions on where to make some cuts and free up cash for other activities you may want to save for, such as an annual holiday or a new car. Use the YourLifeChoices Budget Planner.
Pay off your credit cards
Credit card debt can incur high interest rates and is a waste of your money. Ideally, you would like to stop paying interest on your debt and pay the principal debt off as soon as you can. Shop around the banks to find 0 per cent balance credit card that doesn’t accrue interest for a specified amount of time (Westpac and NAB are currently offering 12 months and 26 months, respectively). Apply to transfer your credit card balance and start paying it off as quickly as you are able – preferably, before the 0 per cent interest period expires.
Boost your credit score
Having a good credit score gives you more options if an unforeseen expense arises. If, for example, you have to purchase a new washing machine unexpectedly, with a good credit score you may be able to negotiate a low or no interest payment plan with the store. One of the best ways to ensure a good credit score is to always pay your bills early or on time.
Distinguish needs from wants
Perhaps the best way to work out what we need versus what we want is to simply walk away from a purchase. On most occasions you will forget about the item you were going to buy, so obviously you didn’t need it. You could also leave your credit cards behind when you go to the shopping centre and only take as much cash money as you want to spend. If your choice comes down to spending the $100 in your wallet on groceries or buying a new pair of shoes, the difference between needs and wants soon becomes apparent.
Create an emergency fund
Once you have highlighted areas where you can cut spending from your budget, start putting away any excess in your savings account to create an emergency fund.
Analyse your spending
Can you negotiate better rates for your phone or electricity bill? Do you really need that monthly magazine subscription, or could you wait a month and borrow the magazine from the library for free?
Do you have any tips for our readers on how to budget?
Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.