Summer holidays are just around the corner, but while we look forward to some long days at the beach after a tough year, it’s worth taking a moment to consider our household finances, and how we can enter 2021 in the best possible financial shape. Here are five tips to get you started:
1. Remember lockdown
Remember those lessons we learnt in lockdown? Reserve Bank figures show credit card expenditure was sliced in half during March, with year-on-year expenditure down by nearly 10 percent. Conversely, year-on-year household savings rose by nearly $18 billion to October, largely in transaction and savings accounts. While lockdown forced us to spend less, it also highlighted how much money we fritter away in our daily lives. Remember when we made our own coffee rather than buying a flat white? Or did without hair appointments for longer than we thought we could? Challenge yourself to a financial lockdown for a month or two during summer, and see how much you can save.
2. Draw up a budget
Try a monthly budget to track spending, or download an app that keeps tabs on your bank balances. Basic budget templates are available in Google, among other places, while apps such as PocketSmith can be immensely helpful in providing transparency and accountability of your budget. Better insights into your financial highs and lows mean you can balance out your spending, and better manage big costs, such as holidays.
3. Don’t settle for less
When you have a minute, collate your monthly bills and figure if you’ve got the best deals. It can be surprisingly easy to assess usage and costs using online calculators offered by providers or financial comparison websites such as Canstar. Spending a couple of hours on desktop research can result in hundreds of dollars saved each year.
4. Revisit the terms of your home loan
Consider your home loan, and if you have the best rate or structure. While changing banks can seem a giant step, it may well be worthwhile, as it could save significant sums on your mortgage. Competition among banks is high and fixed interest rates are now hovering below 2 percent. Switching banks, or even just discussing different home loan structures with your bank manager or a financial advisor could save tens of thousands over the life of the mortgage.
5. Review your insurance policies
Buying insurance is often a set-and-forget process, which can lead to unnecessarily high premiums. Shopping around, combining your insurances into one package, or even making a call to discuss different insurance structures (such as increasing the excess to lower the regular costs) can all deliver big savings.
Remember, as we kick back and enjoy the heat – we are still living through a pandemic, and government support has only recently dried up. The economy remains vulnerable and it is unclear how employment will play out over 2021. So while it may be tempting to cruise into summer by hanging in cafes and bars, or indulging in retail therapy, consider instead investing some time in your financial health. The pay-off will be worth it.