The new financial year is upon us, and experts say it is a great time to reset your finances.
Here’s how you can get started.
Look at your income and expenses. Every. Single. One.
Finance expert and founder of SugarMammaTV Canna Campbell said while it could be a difficult step, it was a crucial one in getting a hold of your finances.
“We can look at what our financial situation looked like this time last year, and even the year before that, and sort of see how we’re going, whether we are improving our financial wellbeing … and start setting some new goals financially,” Ms Campbell said.
“You can start afresh… you can say ‘I’m going to be more organised with my receipts, I’m going to be more switched on with knowing my deductions, I’m going to look at my career progression…’ it’s a really nice refresh and reset.
“Look at your transactions and actually see what things cost. Obviously, a lot of us have seen our energy bills go up, and gas bills, even my mobile phone plan went up the other day, so have a look at what you’re paying.”
Start by writing down your income and expenses over a six-month or year period to get a clearer picture of where your money is going. Also write out your debts and assets.
Cut the fat
With cost-of-living pressures, many people have cut not only luxury purchases, but other items in their budgets.
Look at every expense on the list and run a cost-benefit analysis on each, asking how much value it brings to your life. Items like groceries and energy bills will be part of the ‘musts’ list, whereas entertainment subscriptions might fall into ‘wants’.
Ms Campbell said doing research and calling current providers was the best way to make quick gains.
“Get on the phone and ask for a better deal or start shopping around,” she said.
“Loyalty tax… it’s expensive and quite often businesses are trying to get new customers, so they are willing to give better offers or if you sign up to a certain plan.
“I know for myself, when I called my energy provider to say ‘look, I’m thinking of going somewhere else’ … I actually got my bill down by $45 a month.”
She said doing research on what other providers were offering would help your “negotiating power”, but even just asking for the best deal could see a reduction in costs.
Ms Campbell said her family had also cut their monthly expenses by limiting trips to the grocery store, making meals out of leftovers and bringing lunch to work and buying must-have items second hand.
Set a new (and realistic) budget and some financial goals
Ms Campbell said the next step was setting up a realistic budget and making some goals.
Your financial goals might be getting out of consumer debt. It might be building an emergency fund. It might be to save more for retirement. You might just be trying to keep your head above water. Being clear about your goals will help you set a realistic budget which works towards your goal.
“The cost-of-living has obviously gone through the roof, so everyone needs to review their budget or do a new one if it’s been a while,” Ms Campbell said.
Andrew Dadswell from ASIC’s Moneysmart team, said there was a range of free budgeting and finance tools online.
“We’ve seen more people coming to the website across most topics as people need independent information to help manage the rising cost-of-living,” he said.
He said people could access budget tools, information on investing, superannuation, managing debt and avoiding scams through the Moneysmart website.
Create a financial challenge for yourself
Finances can be dull but setting a bite-sized challenge for yourself can help save money.
Ms Campbell runs different financial challenges throughout the year, including Frugal February and meat-free months.
However, she said putting a focus on generating income could be a better experience for those feeling the pinch.
“When you do these financial challenges, they are fun, they are short bursts … But these days with the cost-of-living most people are doing everything already,” Ms Campbell said.
She said if people still wanted to try a frugal challenge the key was to keep it fun, for a set time and make sure they aren’t too hard on themselves.
“Even if you can do a frugal weekend, or a no-spend week or 10 days of being tight-arse, you know, make it fun,” Ms Campbell said.
“You’ve got to go in with the right attitude and also go in with the attitude [that] yes, there is going to be savings there for you, but what lessons and insights are you going to gain from this.
“Whenever I have done frugal February I’ve learnt a lot about myself, I’ve learned about what I value, I’ve learned about what I don’t value.”
Ask for help
Assessing your finances can be an overwhelming task and there is a range of services, including free and pro-bono ones which can assist in those harder negotiations, including consolidating debts and dealing with banks.
Andrew Dadswell from ASIC’s Moneysmart team said it was important people knew they had options.
“Contact your provider or lender straight away if you’re struggling to keep up with bills, credit card or loan repayments,” he said.
“Ask them about applying for financial hardship. They can explain the options available to you given your personal circumstances. Taking action straight away can stop a small problem from becoming a big one.”
Canna Campbell said it was important to remove the shame around seeking help for financial issues.
“There are lots of free financial counselling services through Australia … I’m seeing an increasing number of financial planners offering pro-bono work to help people out,” she said.
“If you’re stuck and you’re struggling, put your hand up, ask for help, but also this is the start of your financial journey where you learn about money, you learn about how to do a budget, the importance of having financial goals in your life … if right now, you’re struggling, having a goal to keep your head above water is a great goal in itself.”
