When adulting pays off
Let’s face it, while we want to be living our best lives, it is only too easy to get bogged down by the daily grind. If you are one of those who tends to put off financial admin tasks – read on as the boring stuff can have benefits!
This is particularly true if you are wanting to save and buy a home. Let’s look at some aspects of adulting that can really pay off – and some ways to make the tedious stuff a lot easier so you can get back to the fun stuff.
Get cracking on your tax return and spend it wisely
Doing your tax return must win the award for one of the least fun ways to spend your time, but if you are one of the many people who delays doing your tax return until the last minute you are not helping your financial situation. If you do your tax early you can use your return to pay down debt or bump up your savings.
If you are wanting to reduce debt there are a couple of approaches you could consider. One is to prioritise the debt that is costing you the most – whether that’s your credit card or a personal loan, or alternatively you could focus on the smallest debt to pay off – for example a medical bill – and build momentum from there.
Maximising your savings
One method of saving is to ‘pay yourself first’. Instead of paying all your bills and expenses first and then saving whatever is left over, you nominate an amount to be automatically deducted from your pay into a savings account to prioritise your savings.
Lenders are interested in seeing you demonstrate how much you are able to save and will look at your savings history in assessing you for a loan so showing that you are approaching your savings with a disciplined, consistent approach will be highly regarded.
Know your credit score
Another thing a potential lender will be interested in when deciding whether to lend to you and how much they are prepared to lend, is your credit score.
Your credit report is a summary of your credit history and financial habits, and you can request a free copy once every three months from one of these credit reporting agencies: Experian, illion or Equifax.
Your credit score can be influenced by several factors including your debt (past and present), including any problems you’ve experienced repaying that debt, as well as loans (and loan enquiries) you’ve taken out.
Spend a little time and save money
As well as being aware of your credit score, it’s also beneficial to be across your credit card statement. While it is time consuming to go through your credit card line by line each month it’s a good way to see if you are paying for subscriptions or services you aren’t using.
The other way to save money is to check your bills as they come in and see if you can get a better rate on things like electricity, gas or insurance. It can pay to shop around and change providers. Even if it’s just a few dollars a month, a better rate can really add up in the long term.
Protect your assets
If you don’t have insurance to cover your belongings it could be a good idea to also compare relevant policies for home, contents or car insurance for example. If paying for insurance seems counter-intuitive when you are trying to save up a deposit just think about how much it would cost to replace your stuff and what a setback to your savings it would be if items are damaged or stolen.
Pay attention to your super
Your super might be something that feels like a ‘future you’ issue but you don’t want to miss out on what you are entitled to. Your employer must pay at least 11.5% of your ‘ordinary time earnings’ into your super account. If you determine your employer has not met their obligations the Australian Tax Office (ATO) can help you recover your entitlements.
A series of small tweaks and changes in the way you manage your financial situation can really add up, so set aside a rainy day when you’ve got nothing better to do and commit some time to catching up on your financial admin – it will be worth it!
For help and advice managing your finances, reach out to our team here to help get you on the right path.
