As restrictions are gradually lifted and life moves towards the ‘new’ normal, we can start to to focus on how we emerge stronger and in a better financial situation than before. It is possible and here are my top tips to help you on your way to post-Covid-19 financial success.
Reassess and reset
The past few months have been an opportunity for us to reset everything from the planet to our social framework, family connections, ways of doing business, travel plans, and of course, our spending.
If you’ve held a job during this time, which 90% of the workforce have, it’s time to re-think your priorities and how to allocate your resources going forward.
I’m sure all of us have discovered what really is essential spending and how much we can do for ourselves that perhaps we hadn’t considered previously. Think about the dollars you’ve probably saved on daily takeaway coffees or a few quick drinks in the pub on a Friday for example.
As we move forward, here are some of my tips to help manage your money.
Set a limit on non-essential spending
This will of course depend on your income and you can set your own guidelines, but here’s my suggested break down to help you tackle putting together a budget -
50% for needs and essentials
30% for wants
15% for long term goals (saving for a home, future school fees etc)
5% for emergencies
What are you saving for?
Be clear about what you want to achieve both short and long term – it is a holiday, or a deposit for a house? When you have an exciting goal to work for, it’s easier to make day to day sacrifices.
Budget for fun!
Make sure to put ‘fun’ things as part of your budget. Whether that’s takeaway from your favourite restaurant or buying that new outfit you didn’t have anywhere to wear during isolation. It will makes the bigger goals seem more achievable.
Set small goals to get to the big goals
If you’re saving for something big, like a home deposit, set small reward points for yourself. I suggest an experience as a reward rather than a purchase as you’ll create more memories and break up the routine of the everyday. For example, when you reach $5000 and once lockdown is lifted, treat yourself to a weekend away. It’s likely there will likely be special deals for travel in Australia once we can go interstate again. Take the opportunity to visit new parts of Australia, or revisit those parts you’ve not seen for many years, support our local tourism industries and inject some of those savings back into our economy.
Overpay if possible!
Lots of people ask me how they can pay their loans off quicker. There really is only one way to do this and that’s to overpay. Whether that’s via an offset account or increasing your regular repayments, it’s the only way to achieve a lower term on your loan. Now’s the time to look at maybe increasing those payments, so those funds are gone before you spend them on ‘non’ essentials. With interest rates at a historic low, maybe budget as if your interest rate was 5%, which it was just a few years ago, to make serious inroads into the term of your loan. Come and have a chat with Rob and I at North Sydney Broker. We can forecast what different payment rates will do to the term of your loan.
Regular reviews
We pay for so many things each month without even thinking about them – phone bills, internet charges, electricity, loans, general insurances, health insurance…the list goes on!
It pays dividends to check you have the best plan, premium or rate from time to time. There are some useful comparison sites which can assist with this, and when it comes to your home loan, speak to your broker, or give us a call and we can review that for you.
We’re here to help!
Contact us on 0411 601 460 at any time for help with your finances. We’re here at all times, not just during dramas, to assist our clients to build wealth as constructively as possible.