Managing money tips
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Our six golden rules for managing your money
Protecting and strengthening your financial wellbeing has a lot to do with how you manage your finances. So here’s our six golden rules for managing money you can take to the bank.
1. Pay yourself first
Sounds simple, but this tried and true principle is often not followed. Use the money you do have in your hand on well considered choices, rather than chasing reward points or spending money you don’t have (credit cards and Afterpay) which can only take you further away from your goals.
The key is to set up an automated structure for your banking that forces you to pay yourself first before you focus on your day-to-day spending. This makes it so much easier for you to stay on top of your money, taking those ‘do I or don’t I?’ decisions out of your hands.
Set up correctly, this structure should lead to less worries with cashflow and bad debt, and more savings in your bank account.
See the steps we put in place for Pip & Ben to take charge of their finances.
2. Live on less
than you earn
This approach makes our first point about ‘paying yourself first’ a lot easier to carry out. If you learn to live on less than you earn, you’ll always have money left over after you’ve paid yourself for savings, investments, and reducing debt.
Whether you’re feeling financially secure or struggling with costs, it’s always a good idea to see where you can trim off any excess that you can put back into your pocket. For example, the use of paid subscriptions such as Netflix, Disney, Kayo and Spotify can very quickly add up before you know it. It’s likely you don’t need all of them at once, so think about cutting back or giving yourself a monthly budget.
The idea is to monitor what you’re spending on discretionary items to reduce your overall expenses.
Want some more practical ways to save money? See this great article from moneysmart.gov.au
3. Pay off debt
You’ve probably noticed debt has been mentioned a couple of times already. That’s because the biggest obstacle we all face in managing money is debt. The credit card is generally regarded as “bad debt” because it is used for consumption, rather than the “good debt” used to build wealth or increase your income.
We recommend not using a credit card at all, and definitely don’t recommend using your credit card on general expenses. Credit cards can be a dangerous trap, just like credit card reward points which are a false economy. If you don’t feel like you can get the scissors out to your credit card, there are other things you can do to reduce your debt, such as changing over to a 0% balance transfer offer which can save you thousands in interest while you gradually pay down the balance.
Reducing bad debt gives you:
- greater control over your finances which is incredibly important to your wellbeing
- frees up money for savings and investing
- makes it easier with life decisions (taking that holiday, investing in that opportunity, leaving that job or retiring).
See our full range of services designed to help you live your Good Life.
4. Choose the right saving method for you
Managing money really comes down to how you think about saving and spending (your behaviour), adopting a method that works for you and one you can stick to.
For some people this might be using an offset account to build up savings. Others might prefer having an account they can’t access online to limit the temptation of withdrawing from it.
What’s most important is determining what your goals are – we suggest looking to ten years, three years, and now – and then plan out the best way to manage your money to achieve those goals. By understanding how you think and act towards money, you’re more likely to stay on track with your plans.
Learn how your money stories influence your relationship with money
5. Review everything annually
And we mean everything – mortgages, insurances, utilities, loans. Banks and other services rely on apathy and loyalty. If you don’t check your circumstances every year, you could be missing out on significant savings.
Consider just saving a half a percent on a home loan. On a million dollars, half a percent could amount to thousands of dollars that you’re giving to the bank in extra interest that you could be keeping for yourself.
It doesn’t cost you anything to ask the question, ‘can I get a better deal?’, but it could save you plenty.
Download our Bill Comparison Guide from our online resources.
6. Be ready for anything
Expect the unexpected is something we’ve all become very used to. So make sure in managing your money that you’ve always got some funds set aside in times of crisis or opportunity.
At Tribeca, we advise all our clients to have at least three months salary available if needed, whether that’s a buffer for an emergency, short-term funds for a business or investment, or to know you have added protection to cope with the emotional ride of a fluctuating stock market.
We can set up this structure to make it easier for you to build up these cash reserves, as well as regularly touch base with you to make any changes and help keep you on track.
See how we helped Leah create financial security at a time of uncertainty.
If you would like to explore how Tribeca can help you manage your money and enhance your financial wellbeing, please book in a ‘get to know you’ call with one of our financial advisors here.