New Financial Year Money Makeover
by Carlisle Homes
The end of financial year is just around the corner, so it’s time to set goals and get your bank account in check. Here’s how.
The end of the financial year is fast approaching. While there may not be fireworks and champagne to herald the new financial year, there are still ways to ring in the changes.A new financial year is the perfect time to give yourself a money makeover. Use tax time as an opportunity to understand what you’re really bringing in and where that money is going. You can identify ways to save, do some cost comparisons and set goals for the coming year.
1. Get your taxes up to date.
Tax returns are due between 1 July and 31 October (later if you’re using a tax agent, but you must appoint them before the end of October). The sooner you can get this out of the way, the better. With any luck, there’ll be a tax refund heading your way.
And even if you owe the ATO, it’s best to know upfront. The ATO is usually very happy to work with you to arrange a payment plan.
2. Track your spending
Does your budget tell you there should be plenty left over each month, and yet there never seems to be? It’s a common experience. A Ubank study found that 86% of Australians don’t know where their money goes. All those little expenses, like a Friday night takeaway or an unplanned Uber home, can really add up.
If you’re not sure where your money is going, there’s only one solution. Track everything. Make a New Financial Years resolution that for the next month, you’ll record every single piece of expenditure. You can use a spreadsheet, old fashioned pen and paper, or a dedicated app like MoneyBrilliant or Frollo. While the latter allows you to download transactions automatically, consider a manual system. If you have to record by hand, you’re more likely to pay attention to the impact. Discover budgeting tips and tricks to boost your savings here.
3. Look for forgotten fees and charges
Tracking your spending might also help you weed out costs you’d forgotten you were paying. It’s very common to have small recurring charges coming out of your account that you no longer notice. It might be a monthly subscription to a streaming service, the premium option on an app, or the end of a ‘free trial period’ that you forgot to cancel.
While you’re there, check if your bank is charging more than it needs to. Some lenders charge regular account-keeping fees, or charge extra to make ATM withdrawals. If you have a few accounts, it might add up. In this case, have a word with your bank to see if you have the right products for your needs. It might be time to switch.
4. Do some cost comparisons
If you’ve had your insurance policy for more than a couple of years, the chances are that you’re not getting the cheapest premium available. The same goes for utility providers and mortgages.
With all of these providers, unfortunately, loyalty is rarely rewarded. Banks and other service providers offer enticing low rates for new customers, but raise prices steadily once you’re locked in.
Switching can save you serious cash without having to cut out a single luxury. And since businesses want you on their books, they’ll often take care of the bulk of the paperwork themselves.
Start with a comparison site to see if your rates are competitive. For mortgages, start with Canstar or Finder. You can compare energy providers at Energy Made Easy. Insurance policies can be a little more complex since every policy has different levels of coverage. Fill in some details at iSelect and someone will help you work through the process.
5. Set some goals
Now you’ve done the ’spring cleaning’ portion of the job, it’s time to set some goals for the new financial year.
Are you hoping to finally save that deposit for your new house? Update a tired bathroom? Build a three-month emergency fund? Whatever your goals are, write them down. Work out how much you’ll have to save per month to achieve them. And then make a plan to hit that number.
The savings we’ve identified above will help, but if you have an ambitious goal you’ll need to get disciplined. By tracking your spending, you make it possible to see where your money is really going. Are there opportunities to cut back or make some simple swaps? You may be surprised at how much difference it can make.
Once you’ve got your finances under control, it may be time to consider taking the leap and building your own home.