Here’s how to make sure there’s some room left in your budget come Christmas.
1. Be obsessed with details
Banks are run by humans. Humans make errors, so banks sometimes make errors too. They aren’t likely to be big errors, and they’re hard to find but they do add up. More often than not if people draw attention to these little errors banks will quickly and efficiently reverse them.
The most diligent personal finance mavens are constantly on guard for little errors in their financial statements, such as overcharged fees, missed fees, unpaid interest and extra charges. It may be super boring at first but we promise it will eventually be worthwhile. Once a month, print out your bank statements, sit down with a coffee, and read them. If you find a discrepancy, treat $1 like $1,000 and note it down. Most of the time it should be OK, but you will have peace of mind and understand a lot more about how your financial products work.
2. Ask “silly” questions
Spend some time understanding how interest rates and fees work. If you don’t have a background in finance, don’t assume you can’t understand it now. Finance is as much experience and recognising familiar patterns as rocket science. If you have any questions, visit your bank and ask the teller. If someone else can’t explain it simply, chances are they might not understand. Don’t be embarrassed or feel silly. Chat with an expert, read helpful blogs, or phone your bank and ask them to explain things you’re unsure about.
Remember you are the customer, the bank is a custodian of your money, and their job is first and foremost to look after you. Understanding your basic financial cashflows will give you a lot more confidence in tracking and managing your financial affairs and making smarter decisions. There are plenty of financial apps that can help with this, like ASIC’s helpful TrackMySpend MoneySmart app. Whether by providing product information, budgeting tools, or opinions and easy to understand financial advice, financial apps should assist – and not replace – the first principles of understanding finance.
3. Invest some time in thinking about your retirement
We hear it all the time, but really it is never too early to start thinking about your retirement. If you’re not there and haven’t done so already, it’s worth sitting down and planning how much you think you will need to retire comfortably.
You may not be able to increase your income this year, but tools like Monetise can help you make sure you are getting the most from your savings now and as the market changes. If you have any savings left over at the end of the year, you should consider adding that as an additional contribution to the growing balance in your superannuation account because it’s tax efficient and you won’t be able to touch it until you need it. We all have an idea of where we want to be when we retire, and some of us are lucky enough to be very close, but it’s worth facing up to the goal and planning ahead, whether it’s scary or easy!
4. Be generous
Call your friends to test and share your ideas with them. Explore finance together and learn about all the relevant concepts, share tips and tricks. Set goals with your friends and keep each other honest. You never know, the more you learn about budgeting the more you might even start to enjoy it!
5. Make new financial year resolutions
You set New Years’ resolutions right? Well why not take it to the next level and set New Financial Years’ resolutions? Here are some of the ones I’ve used before:
Read the “Money” section of the newspaper back to front
Finally make the move and roll-over your old superannuation accounts to your new one
Read your Product Disclosure Statements to understand your interest and fees
Download your credit score
Save some money and learn a lot by preparing your own personal tax filings
You may knock off all of these, or only a couple, but the process of thinking about your financial future will get you empowered and ready to be a better financial budgeter when you look back the next year. Finance can be fun, especially when it becomes a part of your daily life and shapes the way you think. Happy New Financial Year everyone from Monetise, and happy spending and saving!
Gideon Silverman is the founder of Monetise.com.au
Main pic: Unsplash