Securing your own financial wellbeing should be the goal of every Australian, and part of that means improving your individual financial literacy.
Now more than ever, individuals need the financial literacy skills necessary to make informed choices about savings choices, investment options, dealing with debt and managing superannuation.
So what are some of the most important personal finance tips you and your children should know?
Putting your money to work is an easy way to increase your savings. Many of us dismiss the interest that can be gained from simply moving some of our savings into a high interest savings or term deposit account. According to RaboDirect, almost $3.6 billion in interest is being lost by Australians who only use transaction accounts to house their savings.
Most people have several different jobs throughout their careers. Unfortunately, this also means several super accounts. While the money in these accounts will always be yours, not merging them means you are doing a serious disservice to your superannuation balance. Should you consider switching to a self managed super fund?
Whether it’s your savings account, mortgage or super fund, make sure you’re getting the most out of every dollar. This means regularly checking interest rates between different banks to see what you might be missing out on.
This doesn’t only apply to banks. Consider changing phone, internet and energy providers. Look for the best deals and the money you save could be substantial.
Avoid credit, avoid debt
Though sometimes necessary, buying consumer goods on credit can lead to uncontrollable debt spirals. Before every purchase, consider your ability to make the repayments and whether you can conceivably pay for it outright with budgeting. This goes for everything, from cars to Christmas presents.
Planning for the future is vital in order to enjoy a comfortable retirement. Keep a careful eye on your superannuation ”“ this is the money that will determine whether you will be financially secure or still pinching pennies in your twilight years. Setting up a will is also an important aspect of retirement planning and will ensure your dependents are looked after.
Tracking your spending, setting up an emergency fund and putting aside savings are all part of responsible financial planning. Having a budget can help plug those spending leaks. Smartphone apps are also a great way to keep detailed budgets and will allow you to access them quickly.
When we’re dealing with our at-times hectic lives, it can sometimes be too easy to dismiss an opportunity to save money. However, when you finally do retire, you’ll be thankful you planned wisely. Often the biggest financial gains come not from a lucrative stock tip or grand investment scheme, but from being diligent with your money and following a simple set of personal finance rules.
Justin Lim is a former journalist with financial trade publication, Money Management. He is currently freelancing, writing in a number of fields ranging from business to entertainment and regularly features on Yahoo Moneyhound and Servcorp.