Four top tips for tightening up your personal finances
1. Save, save and save
Lockdown restrictions have meant saving money on travel, Ubers and your social life– so now’s a great time to start being disciplined about directing those savings into an emergency or ‘rainy day’ fund.
Nerd Wallet writer Kelsey Sheehy suggests in an ideal world, you should have three to six months of living expenses stashed away for ‘just in case’. She says if that feels too intimidating a target to aim for, start with one month, then build it to two months and keep going from there.
And if you already have a healthy emergency fund, use the money you would normally spend on things like commuting, gym memberships and traveling to pay off any debt or build up your retirement fund.
2. Shop around on all money deals and policies
Now is also an excellent time to consider refinancing your mortgage and with interest rates so low you’ll have the opportunity to pay off more of your principal loan, saving considerably more in the long-term.
This goes for insurances too. With some Australian private health funds still increasing premiums, despite many elective procedures and extras currently unavailable, there are other options outside cutting this service and losing your over 31 rebate benefits. Moving to a not-for-profit fund is likely to reduce the chances of wearing this extra cost. Using a comparison service provider will help ensure you’re comparing apples with apples and don’t lose important benefits if you change your policy provider.
3. Asking now is better than apologising later
The financial wave of monthly costs can feel very overwhelming if funds feel like they’re drying up. But what all financial institutions are telling customers is to proactively reach out if they are in financial difficulty.
With loan and payment deferrals available, there is plenty of stop-gap assistance available to help people. Banks understand this is not your fault and their empathy and flexibility is at an all-time high.
However, the onus is on you to communicate with your bank and let them know you are struggling. If you just bury your head in the sand and default on payments, your credit rating is likely to take a hit and you’ll get calls asking for fund repayments that will only add stress.
4. Get your tax return in
If your circumstances changed considerably earlier this year you may be entitled to additional tax relief on your FY19-20 return. See your accountant or visit My Gov to learn more about what you may be eligible for. The cost of a tax return may pale in comparison to a benefit you could receive, especially if you’re a parent or you or your partner are low-income earners.
However, a word of advice. The ATO is experiencing high levels of activity with many Australians keen to access their tax refunds during the pandemic. So, if you can, it might be worth waiting until August or later, to submit a return.