Living / Money

10 way to improve your financial wellbeing

In a special session during RUSSH Weekend, CEO of Tilly Money Maureen Jordan and I talked about 10 things that anyone can do to improve their financial wellbeing right now.

This was advice, not just for people who are employed or people who have a mountain of savings. These are things that everyone can do, no matter what your financial situation is. For anyone wanting to improve their financial wellbeing, these are our tips and tricks.

1. Set a goal

Everyone, take a pen and write the amount you want to save each month. Then write down all your non-negotiable monthly expenses, including an allowance for food and transport. Then write down all your incoming money for the month. If you get paid fortnightly or weekly– just add it all up for a monthly cycle. Now minus the total monthly expenses out of all that income. What are you left with?

Is your savings goal achievable or do you need to reassess how much you’ll actually be able to set aside? Don’t put yourself into a corner or beat yourself up for not having saved as much as you originally wanted because you’ve been unrealistic about your costs.

Now reassess your goal to a more realistic amount that will still leave a little room for fun on your weekends or for wine with your friends. Set that aside each month and then you can feel better and better when you’re slowly able to make that savings amount bigger each month.

 

2. Move your savings to a higher interest account

When you put your pay check or your money into a bank account, that money earns interest. That means for every dollar that is there, you receive a percentage increase from your bank as a reward.

Some banks pass on high interest rates (meaning you can earn more on your money) and some have quite low interest rates (meaning not much is earned at all). And interest rates can change throughout the year, but it’s always good to review where the best interest rates are and find out how their reputation is for maintaining high interest rates.

If you go onto a comparison website, you can find out which banks have the highest interest. Currently, Rabobank, MEBank, Suncorp and Bank of Queensland are the four with the highest. Make sure that there is no joining, set up fee or no account fees that cancel out all that good growth.

Westpac currently (as of August 2020) has a high interest savings account available for individuals aged between 18-29 at 3% interest - but make sure you read the terms, you might need to deposit a certain amount every month for example. You could keep your regular debit card and everyday money on your current account, but it is definitely worth moving your savings. You want that money to be working for you.

Say for interest, you had a starting balance of $15,000 in your savings account. If you deposit roughly $1,000 every month into that account. After two years has passed, at a pretty low interest rate of 1.6% p.a. – your bank will have chipped in an additional $859. That’s a nice little slice of pie right there. You want to maximise that.

 

3. Move your credit card debt to a low interest card

While high interest is good for your hard-earned cash, high interest is very, very bad for your debt. High interest means the bank is charging you a higher rate on the money you’ve borrowed. Similarly, to the principle with your savings, use a comparison site to find the lowest interest rate credit card and go about moving your credit card debt across to that.

Make sure your monthly repayments are affordable within your budget and pay that debt off as fas as you can.

 

4. Find out what is tax deductible for you

If you haven’t lodged your tax yet, go right now and Google ATO tax deductions. You need to find out, depending on your job, your industry and your role – what you can claim from the past year as a tax deduction. This means that income tax that has already been debited from you throughout the year, will be adjusted based on those deductions, that is, you might get more of a tax refund.

We all know how amazing it is getting a refund of any sort. But a large refund, that you may not have seen coming – is the best kind. If you have been working-from-home during COVID-19, or for any amount of time between March to June, you are eligible to claim 80 cents per hour. This covers your electricity costs, the depreciation of your computers, internet usage and more. So, if you work 10 hours a day, then you can claim $8 a day or $40 a week. Then multiply this $40 by the number of weeks you’ve clocked up at home. But you might also be eligible to claim books, journals and magazines relevant to your industry, printer cartridges, overtime meals, travel expenses, stationery.

Also, in case you didn’t use it this year – download the ATO app. In the ‘MyDeductions’ section, you can lodge all your expenses throughout the year and then simply upload them when it comes time to lodge your tax.

 

5. Contact your service providers to get a better deal

We all have some mix of internet, insurance, healthcare, phone, gas or electricity providers. A lot of us would have stayed with those providers for years, out of reluctance to manage the transfer. But, if you spy a better offer on a service, you should absolutely quote this to your provider and either ask them to match it or ask them to offer you a better deal. It is much harder for these companies to find new clients than it is to keep a client. Especially if you have a proven track record of being a customer for five or more years - they literally need you. Not vice versa.

Play it cool, give them a call and see what’s on offer. Or if you have been experiencing financial hardship recently with COVID, you should definitely call your providers as most companies are being quite lenient and could come to some terms for you. That could mean pausing your bills for another month or offering you a discounted rate until you recover your income.

 

6. Streamline your subscriptions

Why are you and all your friends paying for 20 subscription services when you honestly can’t be using them all at once? It might just be a little cream on top, money-wise, but these small costs amount to a large sum at the end of the day. If you’re nose-deep in a five-season show on Stan – cancel your Netflix for a few months. It takes nothing to start up again and you just saved $20.

Or If you have a group of friends who are obviously all subscribed to the same services, why not each subscribe to one and pool your money? So, you each only pay $10 a month but you get all the options you ever wanted. Also, if you’re able to, things that you can pay month-to-month will often charge a lower rate if you pay annually. For instance, a Microsoft Office subscription has a hefty discount for an annual payment. And again, look for loopholes if you’re needing a little money holiday. Cancel Spotify and sign up for a 3-month trial. If you have Adobe Creative Suite, if you follow the prompts to cancel your account, they will then offer you three months free to stay. These little money holidays could help a lot of people right now who might not have the same cashflow they did at the start of the year.

 

7. Get some discount apps

Now I hope you have all heard of ShopBack or Honey. You can buy from a range of brands, supermarkets, pharmacies and online retailers through the ShopBack app and get a percentage of the cost back. It may feel like picking pennies up off the ground – but dollars and cents matter. Especially over the long term. Honey is a browser extension. It has a database of discount codes and automatically apply the best one to your cart when you check out. So whether you're shopping on THE ICONIC or Temple & Webster, Honey will automatically find you the best price.

 

8. Change your superannuation allocation

The experts say that if you’re under 35, your superannuation should be in a high-growth allocation. Your super, is invested by your super provider into shares, funds, property or infrastructure – that reflects the investment strategy you choose.

As a default option, super funds operate on a Balanced or Conservative strategy. That means they’re not as aggressive at growing your money or getting you better returns. If you’re under or around this age group, you might want to consider changing your super strategy. You have time on your side, you need the big growth while you’re young so you can move to a more conservative strategy later in life, when you can’t afford the riskier strategy too close to your retirement. And if you change that strategy now, you could earn yourself hundreds of thousands of dollars different in retirement. With the help of compound interest, that superannuation could make you a millionaire in retirement. Fingers crossed.

 

9. Look at every expense you have and ask yourself, how can I lower this?

After you’ve written out your budget and assessed a realistic savings goal, take a look back over each and every expense. Every bank account fee, every monthly bill or weekend allowance and ask yourself: ‘How can I lower this?’

If you brought lunch to work four days of the week, that could be a minimum saving of $40 per week. If you multiply that by the, say, 48 weeks you might be working out of a year – that would be savings of $1,920. Look at buying your favourite cosmetics or stocking up on some of your essentials at sales time like ‘EOFYs’ or ‘Black Friday.’ Or if you know your laptop is about to die this year, see if you can extend its life until one of these big tech sales.

Don’t be afraid of second-hand goods. Facebook Marketplace. Op Shops. If you become a true bargain hunter, you can find designer and quality goods and will feel SO much more accomplished for finding a product at a fraction of the retail price.

 

10. Subscribe to Tilly Money

Understanding how to manage your money and improve your financial wellbeing is, an issue of exposure. You need to make a habit out of checking in and make sure you’re exposed to the right information.

Besides subscribing to Tilly Money, follow a few money accounts on Instagram. Consider buying a book on the topic if your goal is to buy a piece of property, talk to people around you about what they’ve done to get their finances sorted. You don’t want to miss out on the right information because it could mean you miss out on a government grant, a new tax allowance or a financial offering that you could take up.

 

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances. 

Head to Tilly Money for more stories on financial literacy. Or read more from Tilly Money here like how to start buying shares.