Get your finances off to a great start in 2018

Get your finances off to a great start in 2018

December 27, 2017 2 By incomem

 

As we wrap up the year 2017, no doubt lots of people are starting to write down a list of new years resolutions they want to achieve. Common goals are to lose weight, get a new job, plan for a holiday and for a lot of people, get out of debt!

We will go through 10 different plans of attack to get your money on the right track for 2018.

1.       Shop around for better prices on your monthly/quarterly bills (mobile phone plans, utilities, insurance).

 

What I find really effective is to regularly sit down and analyse all of your fortnightly, monthly and quarterly bills and see if you can lower the costs. Companies are constantly changing plans, pricing structures move, new products become available so what may have been a good deal last year, might well be inferior now.

This frequently happens with such services as mobile phone plans and internet plans. Most ISPs (Internet Service Providers) won’t go out of their way to call you to let you know that there’s currently a cheaper plan available with more data on offer than what you’re currently subscribed to. Mobile plans are very much the same, network providers are often advertising deals to attract new customers to join their network, sometimes even with promotional offers that aren’t available to their current customers.

I recently made the move from an Optus plan that was reasonable value but because I am always keen to see what else is on offer, I did a bit of research one afternoon to see what else is out there. I jumped ship to Kogan and have been extremely impressed. I’m currently getting a whopping 23GB of data for only $49.90 a month. This is a huge leap in value considering I was only getting a measly 6GB before for $40 with the Optus plan. On top of that, with the Kogan plan, you can earn QANTAS Frequent Flyer points with every monthly bill which was definitely a huge plus for me as I love racking up those points towards flights.

There are a few good sites that can help with the task of shopping around for better plans to reduce your expenses.

  • WhistleOut Find the best prices on Internet Broadband, Pay TV and Mobile Phone Plans
  • Canstar Find comparisons between health, car, life, and home insurance as well as high-interest savings accounts, term deposits, superannuation accounts and much more.

 

2.       Give your bank account a quick boost by selling items you no longer use.

 



I’m sure it won’t take long if you go through the bedroom, garage and cupboards where you will come across many things that you haven’t used in a long time or even forgot that you still had!

Not only will this help create more space around the home but you can quickly put some money back into your pocket. Electronic devices are always a good place to start as they are in demand and generally easy to find a buyer for.

  • Mobile phones
  • Video game consoles (Nintendo SNES, Nintendo Wii, Sony PlayStation 1,2,3 & 4, Microsoft Xbox etc)
  • Tablets (Apple iPad)
  • DVDs, CDs and BluRays
  • Laptops
  • Digital cameras/DSLR

 

Then there are other items that you’ll find around the house

 

  • Unworn clothes or clothes that don’t fit anymore
  • Handbags
  • Furniture
  • Books

There are lots of places to sell items online or there’s the good old-fashioned garage sale method. eBay, GumTree, various local Facebook buy and swap groups in your surrounding suburbs are all easy ways to flip pre-loved goods.

 

3.       Track your spending.

 

If you are already doing this, great, but for the people that aren’t, this is crucial to begin doing now. I’m sure you all know people that buy multiple coffees down at the local café on a daily basis. One before their work shift and another one or two throughout the day. This person may even be you. That $3.00 (or sometimes more) may seem innocent at first but it adds up frighteningly quickly. Smoking is also another big wallet-killer. Thankfully for me, I have never touched one but I do know people that smoke heavily and it gets incredibly expensive. Especially in Australia with the price of a pack constantly rising.

There are lots of good apps that you can use that will help give you an overview of your day-to-day spending. You will be truly surprised at how making some small alterations can make a huge difference.

income master expenses piggy bank saving money

I use the Pocketbook app which connects to your bank accounts to track the credits and debits so you know exactly where your money is going all in the one place. You can also set a “safely spend” limit where you set yourself a budget for the week and you will get alerts if you start to go over. A great little reminder to keep you focused and on track with your financial goals.

4.       Make pre-tax contributions to your Superannuation.

 

Most of us are paid by our employers by PAYG (pay as you go). Tax is taken out each paycheck so you don’t have to worry too much about it come tax return time. Salary sacrificing a tiny percentage of your pay to make contributions will make a huge difference to your Superannuation balance. Statistics from the ABS (Australian Bureau of Statistics) show that a lot of people aren’t going to be able to live comfortably when it comes to retirement if they don’t proactively do something about it. Below are the average numbers from 2013/2014 of Australians.

 

  • Male Age 30 to 34 years old ( Mean Superannuation balance $36,373)
  • Female Age 30 to 34 years old ( Mean Superannuation balance $25,549)
  • Male Age 60 to 64 years old ( Mean Superannuation balance $292,510)
  • Female Age 60 to 64 years old ( Mean Superannuation balance $138,154)

Those are some pretty alarming figures, especially when you take into account that people are living much longer than they did a few decades ago. So that money has to see you through for a greater length of time. Because of the sheer amount of time that your Super account is sitting there, making contributions gives it a great boost so you can make the best out of compounding interest. Paying yourself first before anyone else is a big part of financial independence. You’ll find that if you set up automatic payments to your savings accounts, speak to your payroll about salary sacrificing for super, you won’t really miss the money, and you’ll get an amazing feeling when you see your accounts in a few months.

5.       Cut down your power costs.

 

Power costs in Australia have become incredibly expensive and unfortunately not all of us can afford one of the fancy new Tesla Power wall devices. One little trick that can be done easily and relatively cheaply is to swap over all the lightbulbs in the house with LED globes. LED globes used to be quite expensive when they first became available on the market but they can be found at a more affordable price now. They have a much longer lifespan than a conventional light globe, approximately 45,000 hours and the power draw is much smaller than halogen globes. I love LED lights so I have converted the entire house and even all of the interior lights in both of my cars.

I’m sure you or someone you know has accidentally left a light on inside the car overnight, only to go to drive to work the next morning and find that the battery is flat. The LED lights you can get for the map lights, courtesy lights have such a tiny draw of power that you won’t have that problem. Just don’t forget the headlights!

 

6.       Learn to cook.

 

Not only is it a useful skill to have in your arsenal, it can save you a lot of money. If you’re looking at your weekly transactions you will more than likely notice just how easy it is to spend a lot of money on dining out, ordering takeaway, and now with UberEats, people are just getting lazy. It’s easier than ever to learn how to cook with the plethora of cooking tutorial videos that you can watch on Youtube now. Drinks can be the killer at restaurants too. If you need to have that wine a couple times a week, it’s much cheaper to get a bottle from Dan Murphy’s and have it at home with a home-cooked meal. Recipe books for inspiration and ideas can be sourced at a library free of cost.

7.       Make use of credit cards with travel rewards.

 

Credit cards can be a dangerous thing. It’s so easy to spend the money as you’re just swiping your card and not physically handing over notes and coins, so sometimes you won’t realise just how much you’ve spent until that statement comes in. If used responsibly and smart, they can be great tools. In Australia, there are many cards that are linked to a travel reward system like QANTAS Frequent Flyer and Virgin Velocity Points. Quite often you will see promotions where just for signing up for a card, you’ll receive 75,000 or 90,000 points to get your balance off to a strong start. They usually require a minimum spend within a couple months to be eligible for the bonus points.

income master credit cards

These are a great way to make going on a holiday a lot easier to afford and also a way to treat yourself as you can accumulate enough points to go business class, something that may have otherwise been out of reach or too expensive to justify. I’m currently using the Westpac Amplify Platinum card which is linked to the QANTAS Frequent Flyer network. I haven’t been a member for that long really and I have already built up enough points for a return flight to Tokyo, Japan! My goal is to build up enough to take the family somewhere overseas flying business class, and I don’t think it will take very long at all.

 

8.       Have an emergency savings account.

 

Health issues, accidents or problems usually happen at the most inconvenient times. When they do arise, you want to have some spare funds available so you don’t have to dump it on the credit card and then fall into the trap of being charged interest because you couldn’t cover the costs in time. Just setting aside a modest amount say $50 per pay cycle is a good habit to get into. It will relieve a lot of stress and you’ll also be gaining interest on those surplus funds being placed in a savings account.

I’ve also started to do a similar plan for Christmas. December always tends to be a very expensive month for me. Driver’s license is due, lots of end of year social events pop up, and the big one, Christmas. So I’m not wondering how I’m going to pay for all of that, I put a small amount of money every pay cycle (for me it’s fortnightly) into a separate savings account dedicated to being used in the month of December. It just makes that crazy time of the year so much easier.

 

9.       Stop impulse buying.

 

With advertising being on the tv, on your phone, on your Facebook feed, you are constantly bombarded with offers and sometimes it’s easy to get suckered into buying something that you could have really done without. When you are in one of these situations, just ask yourself a few questions before hitting the add to cart button. Will this purchase bring me happiness? Will I regularly use this item? Can I afford this item with surplus cash, without using the credit card? You’ll find that a lot of the time you will soon come to your senses and decide that it’s best to avoid buying. This also helps keep your house tidy. Less crap bought means more free space and less cleaning. Win-win because I haven’t met anyone that enjoys cleaning.

 

10.   Clear that debt

 

I know it may seem daunting, but the quicker you pay that debt attention the better. Whether it be a personal loan for a car, credit cards, the interest is constantly compounding. Starting with the small debts and working your way up is a good method as once you knock the first one off, it will give you a sense of accomplishment and motivation to tackle the next.

Make use of balance transfer offers with credit cards. Usually, companies will offer 0% on a balance transfer which can make it much easier to start chipping away at the outstanding balance on the credit card. Most importantly, learn from your mistake and make sure you don’t put yourself in that position again. Spend and live within your means.

 

 

Thanks for reading and I hope you have a great 2018! We will be providing lots of tips for financial freedom this year and it’s really exciting to be making a difference.