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11 handy tips to make the most out of your money

ByAndrew Mirams

We all earn money, irrespective of how much it is, it’s vitally important to understand the key tips to making the most of it.

Here’s my thoughts on the tips to maximise your money’s true value.

Have a budget – and stick to it

The old saying goes “if you fail to plan then you plan to fail” and this goes especially for having a budget.

How can you responsibly manage your money if you don’t track your earnings versus your spending?

It’s almost the single biggest fail we see with people trying to buy a home or investment property, they just have no idea when it comes to what they spend.

Spend less than your earn

It seems silly saying this but for young people especially who get their pay cheque it’s quite exciting.

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And before you know it, they have a car loan, a personal loan for that holiday and credit cards maxed out and they are struggling to make ends meet.

Unfortunately now, they are pre-committed to these financial commitments and need to work through these before being able to take the next steps.

It’s a classic fail that happens all too often.

Allocate funds towards lifestyle and investing goals

Following on from above, if you set specific goals towards your lifestyle and investing goals then you’ll save towards achieving them.

Say you allocate 20% to savings and investing goals and 30% towards lifestyle goals (holiday, new car etc.) then that leaves you 50% of your disposable income to live off.

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If you can’t afford it – don’t buy it!

Simple.

Set small goals at first

Newsflash – you won’t become a millionaire after your 1st years work.

But you can by establishing good habits and breaking this down into small goals.

If you have bad debt – pay off the most expensive 1st 

What do I mean by “bad debt”?

Good question. Traditionally this relates to debt you have for an experience or depreciating asset, or even no asset at all. Examples of this is taking out a loan to go on a holiday or buying a 2nd hand car.

I’m not suggesting you don’t deserve a holiday or a car but if you can save for these rather than borrow for them, you’ll be in a batter financial position.

As a rule, credit card is the most expensive and should be targeted to payoff first. Credit card interest rates sit at around 20% and that’s just wasteful.

You can then work on your other debts accordingly.

If you have a mortgage, review it regularly  

I’ve written about Aussies complacency many times before and our unwillingness to review our most often, costly monthly expense.

I would recommend doing this on at least a bi-annual basis just a financial check up to see if you can’t make any further interest savings.

Buy things you need, not just what you want

Before committing to that purchase, just ask yourself “Do I really need this or do I just want it?”

If you don’t need it, the item will probably only end up sitting in a cupboard or not being used after the early glow wears off.

Invest in yourself

We are very fortunate here in Australia to have a strong and viable superannuation system. If you can afford to invest a little more into your super, do it. It will pay you back in spades in the future.

Investing in your own superannuation will give you the greatest benefit of compounding you will find. And it’s compounding that give you more choices later in life.

Have enough insurance 

Australians are still grossly underinsured.

It’s amazing that people will insure their car, their home or even a holiday but won’t then insure their life or, the important insurance of all, their income.

Without income protection insurance, you put everything that you have at risk as remember, it’s your income that supplies the things that you have.

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Review everything regularly  

Taking the time to review all your financial commitments regularly will be worth the investment.

Most things get cheaper and better over time, whether it be your mortgage, your life insurance, your mobile phone plan or utilities, there are always competitive offers out there to entice you and save you money.

Take the time and you’ll be pleasantly surprised.

Andrew Mirams
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