Photo Credit: Images_of_Money
Money problems are accepted as a fact of life in today’s economic climate.
But they don’t always have to be.
Yes, it’s tough to keep your head above water financially.
But there are also easy ways to avoid common money issues.
Here is our list of the five most common money problems facing many Australians, and simple ways to rectify them. Now.
#1: Money seems to disappear from my account
There are the large purchases that give your bank account a whack and cause you to reign in your spending for a while. Then there are the smaller money leaks that tend to go unnoticed.
You know…the pay TV channels that you rarely watch. The gourmet cheese that always goes off before you eat it. The $1 tip you leave the barista every morning because you hate carrying change.
When looked at in isolation, these little things can seem insignificant to your overall financial position. But outlaying $15 a week on three unnecessary items can quickly add up over the course of a month; a year.
Get your spending in check by plugging the tiny leaks in your day to day. Cut out convenience food, reconsider your recreational items and think twice before parting with small amounts of money. You will quickly notice a boost in your financial position and your ability to afford the big things that will really make a difference to your life.
#2: I don’t have a budget
Some people float along in life pretty comfortably without a rigid budget. But if you consistently find yourself falling short every pay cycle or mysteriously unable to save despite a healthy income, it’s time to hit the spreadsheets.
A budget doesn’t have to be unrealistically strict to be effective. In fact, a simple to understand and easy to implement plan will be more successful in the long run. You will be satisfied when you hit your targets and less likely to splurge out of frustration.
The key to a strong budget is compartmentalisation. Don’t just divide it into “savings” and “spending money”. Break down what you spend in main areas like food, clothing, bills and school fees. This way, you will be able to see where you are overspending and reallocate funds to areas that are important to you.
If budgeting isn’t in your skillset, there are a range of online tools to help you out. Moneysmart is our favourite site for all things financial. You can also arrange an in person consultation with a financial counsellor through the Salvos.
#3: I have no idea about my retirement and super needs
Many people dismiss thoughts of superannuation and retirement as a future problem. But every week you fail to get our super in check is another week that you will potentially need to keep working at the end of your career.
If your super is all over the place, it’s time to get it in check by heading to the ATO website and setting up an account.
Why use the ATO rather than your individual super funds?
The ATO online tool can use your Tax File Number to find all of your super accounts, and display the membership details and balance as at the last reporting period on screen. From there, you can roll your super over into a single account.
Through the super funds themselves, this information usually takes a few phone calls or online inquiries to obtain. Using the ATO tool you will be done in minutes.
Got all of your super together?
The next step is to sought out whether or not you are on track for your dream retirement.
Think about your outlays at present and the kind of retirement you envision. Use these ideas to plan how much money you think you will need to live comfortably.
Once you have this basic goal in mind, go to MoneySmart and look at their retirement planner. It contains a range of tools that can help you to understand retirement, super and how much money you will need tuck away to keep yourself afloat down the track.
Being proactive about your financial future is an investment of time that will actually pay off.
#4: I have no rainy day fund
Life is full of surprises. Usually they are poorly timed.
Remember when your car died the day after you splurged on that holiday? Yep. That.
Make sure you have a rainy day fund tucked away for those unexpected (but inevitable) financial pressures – even if it’s a few hundred dollars. This will (a) give you peace of mind and (b) make life a heck of a lot easier in moments of panic. It’s not just a financial backup plan, but an emotional one as well.
#5: I am in debt
Not enough people take debt and repayments seriously. Recent changes to the Privacy Act mean that outstanding payments on something as simple as your electricity bill can be noted on your credit history. In other words, a small debt can have a big impact on your financial future if you don’t stay on top of things.
After you build a modest rainy day fund, your priority needs to be the clearing the debt weighing you down.
While there are many different ways to wipe out debt, for us, the snowball method is the most effective.
