The 2023-24 financial year is now well behind us and there’s nothing like closing a chapter to inspire thoughts of a fresh start.
But cost-of-living challenges persist, and many Australians are looking for ways to cut back and maximise their savings to meet their financial commitments among interest rate and inflationary pressures.
Now is a great time for a check-up and to set yourself new financial goals.
1. Create and track your budget
The best way to know where you’re headed is to understand exactly where you are. By tracking your income and spending, you can identify where your money goes, and avoid some non-essentials or reduce expenses.
Start by adding up your monthly expenses and looking at your income. You might uncover some unnecessary costs that could be trimmed from your budget. If you buy your lunch every day, you could make your own lunch instead. If you spend on non-essentials like pay TV, gym memberships, entertainment and eating out, you could either cut back completely or find more affordable options. One of the quickest ways to do this is with a tool like the AMP Budget planner calculator.
Don’t forget to look at your liabilities. How much is your credit card debt? Do you have a car loan that’s eating into a possible savings and stopping you from achieving your long-term financial goals? In the end, every bit adds up. It’s your lifestyle so you don’t need to deprive yourself of every bit of fun, but even cutting back a little here and there could make a difference.
2. Review your bill providers
Bills are an inescapable part of life, but it’s possible you may not be getting the best deals. Reach out to your gas, electricity, mobile phone and broadband providers, and see if they have better deals to help you save more money. You may also be able to reduce insurance premiums by adjusting the excess, extras or level of cover.
You could even shop around for a new provider, especially if your contract is due to expire. There are plenty of comparison sites online to help you make an informed decision that suits your lifestyle and your budget.
3. Consolidate your debts
Having multiple debts, such as credit card debt, personal loans and a home loan could mean you’re paying more in interest rates and fees than you have to.
Some people use their home loan to consolidate their debt if it offers a lower interest rate. Other options include rolling your debts into a new or existing personal loan, or credit card balance transfer.
It can help to review comparison websites for loan options and rates, speak to your bank or mortgage broker, or to us.
4. Review your direct debits
The set and forget nature of direct debits can be convenient and even save you money, especially when it comes to bills, rent or mortgage payments. But they can also become costly if you lose track of subscriptions or memberships you’re paying for, or a free trial has ticked over to a paid subscription without you realising.
In a year when budgets are tight for many Australians, it may be time to review exactly where your direct debits are going. Do you need four devices linked to your Netflix account, or a premium subscription to Spotify?
5. Take advantage of Government rebates and vouchers
Australian federal, state and territory governments are helping ease cost-of-living pressures with various rebates and vouchers, including energy, travel, sport, recreation and more. Find out what you could be eligible for by visiting your relevant government website.
6. Maximise your savings
A good starting point is to work out what you’re saving for and whether you need immediate access to your money.
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A savings account where your money is readily accessible might be useful for a short-term goal. A standard savings account usually offers low fees and access to your money, but you may get a lower interest rate. With higher interest savings accounts there may be penalties for withdrawing your money before a set period of time or if you don’t meet ongoing minimum deposit requirements.
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A term deposit, where your money is tied up for a set period of time in return for higher interest, could be more suitable for a longer-term goal. Term deposits work by locking your money away for a certain timeframe in exchange for a guaranteed return. Usually, the longer the timeframe, the higher the interest rate.
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An offset account can help you save money by minimising the interest you pay on your home loan. Offset accounts allow you to put extra money into your account to offset your home loan balance, so you only pay interest on the remaining portion of your loan.
You’ll need to take into account a number of factors, such as fees, interest rates, how accessible your money is, whether you can set up an automatic direct debit and whether there’s a minimum amount you need to deposit each month.
7. Invest your money
With cost-of-living pressures on the rise and many Aussies tightening the purse-strings, investing money can feel like a ‘someday’ goal for many of us. But by starting with even a small amount, and investing that regularly, you can enjoy the positive impact of compound interest and its multiplier effect over the long-term.
Some ways to invest money include shares, property, exchange traded funds (ETFs), and making additional super contributions. Your best option will depend on your lifestyle, the amount you aim to save and your risk tolerance.
Before investing your savings, it might be useful to speak to us and we can help you make the right choice for your goals.
We can offer some great tips and ways to help get the most out of your money.
Source: AMP July 2024
Important:
This information is provided by AMP Life Limited. It is general information only and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances and the relevant Product Disclosure Statement or Terms and Conditions, available by calling PH 07 55931215 , before deciding what’s right for you.
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