Banking tips we can all use
We all use banks most of the time and knowing how to spend or save your money wisely can be tough. While you may be able to do your banking with just a few taps on your phone, managing money well is much more complicated. Here are a few tips to help you get started.
1. Budget using an app or a website to help
Tracking how much you spend weekly and monthly shows you where your money goes and how you can save more. You can use a budgeting app to tracks your cash automatically. Choose an app that lets you spend as little or as much time on budgeting as you want. From there, you can identify your total fixed expenses, such as rent and car payments, and more flexible costs such as shopping and dining out. You can use the Moneysmart website which has a lot of free advice as well.
2. Set up automatic transfers to your savings
When you have a rough idea of how much you can save regularly, create a recurring transfer from your checking account to a savings account. By making savings automatic, you can get used to spending ‘below your means’ and never have to worry about remembering to transfer. It’s also good to set up automatic transfers to savings accounts which reward you for a monthly increase by a higher interest rate, so set this up.
3. Avoid overdrawing your accounts
Before you pay rent or spend any other big chunk of money, take a look at your account’s available balance. This can prevent you from spending more than you have in your account because if you overdraw, you may be charged a fee. If you get a number of these, they all add up.
4. Establish credit
Loans and credit cards can help you build good credit — as long as you stay current on monthly payments and don’t overuse them. Your credit score, which shows how responsible you are with credit, is an important factor which lenders check before approving car loans and mortgages. The better your score, the lower the interest rate you may be eligible for.
5. Repay debts strategically
If you have debts from multiple credit cards and student loans, pay the minimum on each and then contribute more to your higher-interest debts. By making these a priority, you can reduce how much interest you’re paying faster than by treating all debts the same.
6. Start an emergency fund
Being financially prepared in case of health emergencies or any other financial strains can save you from going into debt. Have a separate savings account just for this purpose — don’t mix it up with your regular savings. A good rule of thumb is to save enough to pay three to six months’ worth of living expenses.
7. Set long-term savings goals
Consider opting to pay a higher rate to your superannuation on a long-term basis as this will help you out when you retire. The earlier you start doing this the better.
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