Who is the best person to get advice from when it comes to managing your finances?

Getting your personal finances better organised should save you time, spare you stress and swell your disposable income. Here are some strategies that could deliver a favourable return for what’s usually only a small investment of effort.

1. Track your spending

Do you know how much you spent on eating out last month? Or buying petrol? What gets measured gets managed so the first step towards gaining control of your finances is working out where your dollars go. 

2. Pay yourself first

Most people pay their bills first, then spend, and save, whatever is left over. Many of those people never achieve significant financial security. Counterintuitive as it seems, many have found the ‘pay yourself first’ method is the road to wealth. When money comes in, set aside a certain amount for personal spending and, ideally, saving first. Only then start dealing with other outgoings.    

3. Have some SOS savings

Even if you’re not much of a saver, you should have enough money stashed away to cover your living expenses for at least three months. You may never have to draw on this money but knowing you have some breathing space, should calamity strike, provides priceless peace of mind. Plus, if something does go wrong you won’t have to immediately resort to maxing out credit cards or taking out emergency loans with punishing interest rates. 

4. Automate regular bills

It should take you no more than a few minutes online to arrange for the automatic debiting of recurring expenses such as body corporate fees or car loan repayments. Doing this will save you the time involved in having to transfer this money yourself and ensure you  never get hit with late fees.  

5. Avoid the laziness tax

You could be paying less for things such as your car insurance, internet service and electricity if you shopped around. Just contacting an existing supplier and telling them you’re considering going elsewhere will typically result in them offering a better deal. Companies know most of their time-poor customers won’t push for a better price so you can bank large savings if you’re part of the minority who drive a hard bargain.

6. Demolish that house of cards

Do you have a store card, a couple of credit cards and a back-up credit card you use when travelling? There are two issues with this. Firstly, it often means lots of fees and charges. Secondly, it means easy access to lots of credit you may not need. This can lead to increased debt, especially for those without iron self-discipline. Do a spring clean and rationalise your supply of credit cards to only ones you need.

7. Digitise your receipts

Does tax time involve scrabbling through your wallet, glove box and kitchen drawer grabbing at crumpled receipts? If you bank with Macquarie, our online banking allows you to quickly upload photos or documents to your account. These are instantly synced across platforms and stored securely within Macquarie's environment, allowing you to retrieve them easily at a later date.

8. Sort your super

Almost half of all Australian workers have their super spread over a number of accounts.1 It’s an easy situation to find yourself in. Especially if you’ve changed jobs a few times and been too busy getting a handle on your new role to worry about making sure the money from your previous super account gets transferred to the new one. There may be little or no advantage in having super ‘diversified’ across many accounts. It just means you could be unnecessarily be paying multiple management fees instead of just one. Taking action now could result in you saving the money that would have otherwise been spent on fees.

What next?

Speak to your financial adviser to help you work out a strategy to meet your financial goals.

You don’t need a higher-paying job or a windfall from a relative to improve your personal finances. For many people, better money management is all it takes to reduce their spending, improve their ability to invest and save, and achieve financial goals that once seemed impossible.

Even if you feel like your finances are stuck in a bad place with no way out, there are a number of things you can do to create a better situation for yourself. Here are seven to get you started.

1. Track your spending to improve your finances.

If you don’t know what and where you’re spending each month, there’s a good chance your personal spending habits have room for improvement.

Better money management starts with spending awareness. Use a money management app like MoneyTrack to track spending across categories, and see for yourself how much you’re spending on non-essentials such as dining, entertainment, and even that daily coffee. Once you’ve educated yourself on these habits, you can make a plan to improve.

2. Create a realistic monthly budget.

Use your monthly spending habits, as well as your monthly take-home pay, to set a budget you know you can keep.

There’s no use setting a strict budget based on drastic changes, such as never eating out when you’re currently ordering takeout four times a week. Create a budget that works with your lifestyle and spending habits. 

You should see a budget as a way to encourage better habits, such as cooking at home more often, but give yourself a realistic shot at meeting this budget. That’s the only way this money management method will work.

3. Build up your savings—even if it takes time.

Create an emergency fund that you can dip into when unforeseen circumstances strike. Even if your contributions are small, this fund can save you from risky situations in which you’re forced to borrow money at high-interest rates or possibly find yourself unable to pay your bills on time.

You should also make general savings contributions to strengthen your financial security in the event of a job loss. Use automatic contributions such as FSCB's pocket change to grow this fund and reinforce the habit of putting away money.

4. Pay your bills on time every month.

Paying bills on time is an easy way to manage your money wisely, and it comes with excellent benefits: It helps you avoid late fees and prioritizes essential spending. A strong on-time payment history can also lift your credit score and improve your interest rates.

5. Cut back on recurring charges.

Do you subscribe to services you never use? It’s easy to forget about monthly subscriptions to streaming services and mobile apps that charge your bank account even when you don’t regularly use these services.

Review your spending for charges like these, and consider canceling unnecessary subscriptions to hold onto more money each month.

6. Save up cash to afford big purchases.

Certain kinds of loans and debt can be helpful when making major purchases, such as a house or even a car that you need right now. But for other big purchases, cash offers the safest and cheapest buying option.

When you buy in cash, you avoid generating interest and creating a debt that requires months—or, often, years—to pay back. In the meantime, that saved money can sit in a bank account and accumulate interest that can be put toward your purchase.

7. Start an investment strategy.

Even if your ability to invest is limited, small contributions to investment accounts can help you use your earned money to generate more income.

Find out if your employer offers 401(k) matching, which essentially serves as free money. Consider opening a retirement account or other investment account.

The path to better finances starts with changing your own habits. Some of these changes will be easier than others, but if you stay committed to this transformation, you’ll end up with great money management skills that will serve you throughout your life—and in the meantime, you’ll have more money in your pocket.

The foundation of good money management is a rock-solid budget. Create your own by downloading A Complete Guide to Budgeting today.

*Originally published October 2020. Updated September 2021.

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