New year, new (financial) you
Need a money makeover? Here are 4 steps to get 2020 off to a great start.
Let's face it, most New Year's resolutions peter out by the time Easter rolls around. From the activewear clad folks pounding the pavements to the clean eaters in the office kitchen, by about autumn, life gets in the way and those good intentions go right out the window.
But how about a resolution that you can knock off in less than a few hours and the benefits can be felt for the rest of the year? Not only will this resolution leave you feeling smug but there's a good chance you can save some money too.
Check your credit score
Do you know what a credit score is? If you don't, you're not alone. In fact, over 11 million Australians admitted to not knowing what a credit score is too. And no judgment here – I didn't know what mine was until 12 years ago when I applied for a home loan and found out the hard way. (Promise this was well before I started to work at Finder!)
So don't be like me. Get on the front foot with some easy to get knowledge now. First up, what is a credit score? Basically, it's your financial identity and it's how banks and other financial institutions view you as a good or bad risk to lend money to.
A good credit score shows a lender that you have the ability to meet your financial obligations if they give you a loan or line of credit. A bad credit score could result in you getting rejected for a loan, or inflate the interest rate you're offered.
Second, if you want to find out what your credit score is, it's easy and doesn't cost a cent. You can apply here and you'll get your report and regular updates so you can track when things change.
And if your score isn't quite where you want it to be, we have some tips on how you can improve yours.
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Sort out your super
Stay with me, as soon as I mention super you'll want to fall asleep or go watch some cats on youtube but it's worth a few seconds of attention I promise.
I know super can be shorthand for boring so why not think of it as a gift to your future self instead? Who doesn't love presents? Especially if it's for (future) you.
Superannuation is the main way of saving for retirement in Australia (and it's compulsory). In fact, all Australian employers are required to pay the super guarantee to their employees. The current rate is 9.5%.
It's also the main way you can ensure that in the future you'll have a decent amount to live on when you retire. The Australian Bureau of Statistics (ABS) has revealed the average superannuation balance in 2017-18 was $168,500 for men and $121,300 for women. That might sound like a lot but it's likely that it's not enough for a comfortable retirement.
So what can you do right now to spruce up your super?
- Find and rollover your super now. If you have more than one super account, it's a good idea to roll it over into one account. One account means less in fees and more opportunity to make that lump sum grow. Don't know where to start looking for your super? Head to Australian Taxation Office (ATO) and sign up.
- Choose a new fund. When choosing your super fund it's important to look for a fund with low annual fees, a history of high-performance returns and an investment strategy that aligns with your preferences.
- Consider a salary sacrifice. This means contributing a little extra each payday to your superfund – a great way to supercharge your super balance and you'll pay less tax.
Overhaul your energy bills
Household bills are another boring fact of life. And energy bills manage to be extremely dull and hard to understand all at once, quite an achievement really.
But the good news is that there is an easy way to decode the mysteries of an energy bill, and reviewing these bills is a great way to save some serious bucks in some cases.
Hunt down a copy of your latest bill and take a look for:
Amount due. This is usually shown at the top of your bill. Usually, there is a total amount and further down, the discounted amount that's offered if you pay on or before the bill's due date.
Due date. This is the date when payment must be received if you want to get a pay-on-time discount.
Average daily usage. You usually need this information to compare other energy plans. For electricity, daily usage is shown in kilowatts per hour (kWh). For gas, it is usually shown in megajoules (MJ) for the entire billing period.
Usage comparison details. If you have been with your provider for more than a year, you may see details about your average daily usage for the same billing period 12 months ago. For electricity bills, you can also see how your usage compares to other households in your area.
Bravo! Now you've got these details you can log into our energy finder to see if you can get a better deal.
Top tip: If you want to stay with your current provider you can also call them and ask for a better deal once you've compared other deals above. Most companies have retainment departments whose job is to keep customers just like you, so don't be shy, call up and push for a better deal. If they don't come to the party, it's time to take a walk and we can show you how to make the choice and the change for the better.
Audit your subscriptions
From streaming TV and software to food boxes and the old "paying to not go to the gym", subscriptions can really add up. Especially when many new services offer sweet free trial periods which can then automatically click you over to a paid model once that period runs out and you forgot to cancel.
Often the amounts are small, a Netflix here, an Amazon Prime there, a food box delivery over there but collectively they can add up.
Take a look at your bank account or credit card details and run a thorough audit. Then ask yourself:
- Do you really need five streaming TV services?
- Do you honestly eat those dinner delivery boxes or do plenty end up in the bin because you are tempted by Uber Eats or eating out?
- And as for that gym membership…..? It's time to face facts and take a closer look at what you really use in your daily life.
Then it's time to get creative:
- Can you swap out the gym for running in the park or the local swimming pool?
- Can you share your streaming subscription with a friend or family member?
- And could you meal plan and shop for yourself rather than paying for it all to be delivered to your doorstep?
Guaranteed, you will find at least a couple you can live without so be brave and cancel them on the spot. You will be surprised by how much you can actually save month on month. You may not even notice the absence of them and it's a lot less traumatic than giving up your daily coffee, I promise.
Make sure you relax...
So that's it. Grab yourself a cool drink, sit back on the couch and polish that halo. Not only have you given your financial life a makeover, but you should have also saved some money. A New Year's resolution that's no sweat? Literally.
If you are struggling with your personal finances, consider speaking to a professional financial counsellor by calling the National Debt Helpline on 1800 007 007.
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