This article was written by Terri Unwin
Personal Mortgage Adviser at Smartline Personal Mortgage Advisers
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How do the words ‘financial planning’ make you feel? What about ‘mortgage’? Or ‘superannuation’?
Believe it or not, a staggering 52 per cent of Australian women find dealing with finances stressful, and around 2 per cent of women have no savings for retirement.
Australian women face unique financial challenges. On average, we have less superannuation than men by retirement. The cost of having a child costs around $13,000 in the first year. Almost half of Australian women work part time, compared with one in six Australian men.
Many women with part time incomes, or small business entrepreneurs need to implement effective budgeting strategies so we can make our money go further.
Here, we discuss some strategies for getting the most out of your money, so you can save more for retirement, or maybe even buy your first home.
Make a budget
Sure – ‘budget’ seems like a scary, finance-y word. But having one can save you heaps in the future. It can also give you peace of mind, because you know what you have, what you can expect, and how much you can (realistically) afford to spend.
So, how do you begin?
Focus on the previous three months. Write down your income for this period. Next, check your bank statements and credit card bill, and write down your essential expenses, like mortgage repayments, rates and electricity. List non-essential expenses, like new party shoes. Total each figure, and divide by three. You should have a rough idea of what you need to spend, and what your income is each month. You’ll also know how much you’ve got spare.
Tighten the budget
It’s possible to tighten the belt, and still have a fun time. We promise! One trick to tightening the budget is dropping one or two small spending habits, like coffees and lunches out. Just one $5 coffee out every day of the year will cost you a total of $1,825. By choosing a cheaper alternative, or cutting back the habit, you can put a lot of that money into savings.
Other savings include catching public transport rather than driving, making lunch at home, eating dinner in and reducing your energy costs.
Make a savings plan
Having a goal can help you get on top of your savings. What’s your financial goal? To own your own home? Pay off your credit card? Go on holiday? Work out what your financial goal is, and set an achievable time line. Now it’s time to implement a savings plan.
Work out how much savings you need, and divide by the number of weeks in your time line. If you want to save $40,000 for a first home deposit in three years, you will need to save around $256 every week.
The easiest way is to redirect this money out of your income, and straight into a high interest savings account every week. That way, the money is saved before you know it’s there.
Reduce your interest repayments
One way of putting more in your piggy bank is to talk to your mortgage adviser about restructuring your existing home loan, to potentially reduce interest rates and lender fees. By extending the life of your loan, you may have the opportunity to pay less on your mortgage each week. It’s worth discussing whether increasing the frequency of payments will reduce interest repayments over time.
You might also want to set up your everyday bank account as an offset account, which means the amount in this account is counted against the remainder of your mortgage, which lowers your interest repayments.
Check you are getting the best price
It’s worth allocating a day a year to review all your fixed expenses, like gas and electricity bills, phone and internet, and home and car insurance, and make sure you are getting the best rate. Sometimes, new customers get a discount when they sign up to a new provider, but the discount lapses over time. Sometimes, new discounts are made available. There are often pay-on-time discounts, or discounts applied when you have all services with the same provider. Make sure you ask to speak to the customer retention department, rather than sales.
Doing your budget and putting your savings plan in place means you are more in control of your finances. You can pay off your debts, or save for something you really want.
SKYROCKET YOUR PROFIT CHALLENGE
As part of our Money March celebrations we’re holding a free challenge focused on providing activities, techniques and strategies that you can implement in your business to ‘Skyrocket your profit’ The challenge starts on Monday 22 March, click the banner below to register for the challenge:
About our guest writer
Terri started her Smartline Franchise in 2004, after 16 years at the Commonwealth Bank, so that she could help her clients find a home loan solution from over 25 lenders. Terri’s mortgage broking business is based in both North Rocks and Balmain. She is fully mobile and services all areas of the Sydney metropolitan area and can visit you outside of working hours in the comfort of your own home. She can look after all your financing needs including car finance, commercial and business financing and SMSF lending. Contact Terri here: www.smartline.com.au/mortgage-broker/tunwin/