Never mind feeling spooked on Halloween, sometimes day-to-day financial challenges can be all it takes to see your stress levels soaring.
Sound like a familiar scenario? Here are some quick tips to help combat some common financial fears:
1. How am I going to make my pay last until payday?
There’s nothing quite like that sinking feeling when you realise you’re almost out of money and it’s not even close to payday yet. If this happens on a regular basis you could find yourself even more out of pocket as time goes on.
- Look at your spending history for the past quarter so you can build up a picture of where your money is going. List which items could be deemed essential spending and which could be categorised as luxury items.
- Make a commitment to yourself to think twice before handing over your card for those spontaneous purchases.
- If you’re a smartphone user, download your banking app to help keep your finances front of mind, and get in the habit of checking your balance regularly.
- To help with budgeting, consider scheduling direct debits to come out just after you get paid so your essential payments are taken care of straight away.
- You may find it easier to transfer a set amount of spending money into a separate everyday account, so you know exactly how much money you have for day-to-day purchases.
2. Will I have enough to retire on?
Australians have increasing confidence in the superannuation system, according to the ING DIRECT/Financial Services Council Superannuation Sentiment Index (2014), but 52% are still concerned they won’t have enough to fund their retirement.
- Start taking control of your super by reading your annual super statement. Check your balance, fund performance as well as any fees you’re paying for.
- A retirement planning calculator can help you determine how much you should be aiming to accumulate, and compare how you’re tracking against plan.
- Found yourself with a shortfall? There are things you can do to improve the state of your super. Fees can have a huge impact on your super balance – shop around for a low fee account which offers value for money.
- Consider consolidating multiple funds into just the one, to make it easier to manage as well as minimise paying fees on more than one account.
- If you are in a position to do so, you may also like to make additional contributions to your super to help boost your balance. If you need help, consider speaking to a financial adviser for advice tailored to your personal circumstances.
3. Is now the right time to buy a property?
While buying a home is on the wish list of many Australians at some stage in their life, there are many variables which can influence whether the timing is right to do so.
- Firstly, consider the upfront costs, including whether you have enough for a deposit (generally you will need at least a 20% deposit to avoid paying lenders mortgage insurance); as well as some extra set aside to pay for any additional costs such as stamp duty, conveyancing and removalists.
- Look at the location you want to buy in – is it more cost effective to rent or buy in your area? If it’s far cheaper to rent, renting for a while longer may give you the opportunity to save up a larger deposit which could reduce your borrowing costs in the longer term. A rent or buy calculator could help you work out what is the best option in your ideal location.
- Remember, interest rates can go either way and you never know for sure until it happens. Rather than basing a buying decision on low interest rates, weigh up your attitude to risk and consider how you would manage if your repayments were to increase. Choosing a fixed rate home loan may help with budgeting as you know exactly how much your repayments will be, irrespective of interest rate changes.
4. Will I cope financially if I lose my job?
Having a savings buffer to call upon in an emergency can help give you peace of mind.
- If you already have a savings account, consider setting up a separate one where you can build your emergency fund – one that you won’t dip into in case you really need to.
- Treat your payment into your savings fund the same way you approach paying utilities and household bills. Transfer a set amount to your savings amount every time you get paid, so you’re building up a savings buffer without even thinking about it.
- The key to saving is consistency, so even if you’re only transferring a small amount across the fact that you’re doing so regularly is a positive habit to get into. It will all add up in the long term!
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