Tips to get financially fit in the new year
According to our recent Credit Savvy study, one in three people spend more than they can afford during the holiday season, and nearly a quarter of us take three or more months to financially recover. If you’re nursing a credit hangover, we’ve compiled five tips to help you get financially fit for the new year.
1. UNDERSTAND WHERE YOU’RE SPENDING MONEY
Take a look at your expenses and your income. Go through your recent statements and work out where the dollars are going. Your bank may even have a handy online spend categorisation tool (for example MySpend) that helps you work out how much of your income is going to groceries, rent, loan repayments, dining, entertainment and other expenses. Are you spending more than you thought on those Ubers? Is there an old magazine subscription still active that you don’t need? It’s time to get familiar with your spend.
2. MOTIVATE YOURSELF WITH A GOAL
Do you have something special you’re saving up for? Perhaps you’re already dreaming of your next holiday, a new car, or working overseas? Having motivation can be incredibly powerful when you have to forgo certain luxuries for the sake of saving money.
3. SET A REALISTIC BUDGET
Once you’ve worked out your outgoings and you understand what motivates you, it’s time to revamp your budget. Make sure you’re realistic and don’t forget to budget for some fun! It can be a good idea to set some smaller milestones and to reward yourself when you achieve these.
4. KEEP AN EYE ON YOUR CREDIT REPUTATION
It’s a good idea to request a copy of your credit report from each credit reporting body in Australia and make sure the details are accurate and up-to-date. Lenders can consider your credit history and credit score as part of their assessment process when reviewing applications for loans and credit cards. You can also check your credit score and credit report summary online through a free service like Credit Savvy.
5. CONSIDER ALTERNATIVE PRODUCTS
It’s tempting to forgo the paperwork and stick with financial products you already have. However, things can change rapidly over the course of a year – new products emerge that may be more suited to your needs, there may uncompetitive rate rises from your current lender, or your requirements may have changed. If there are savings to be had from changing products, or even calling your provider and requesting they match a better rate, it’s certainly worth spending a little time doing the research. (Hint: Credit Savvy even has a comparison service to help you compare credit cards, home loans and personal loans).
Hopefully, that’s given you a good starting point as you tackle the New Year. Here’s to a prosperous and enjoyable 2016!