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Spring cleaning your finances – five foolproof tips

With winter over and spring in the air, now is a great time to review your finances and make sure your money is where you want it to be.

A lot changes in a year. Perhaps you’ve moved house, bought your first home or downsized to a smaller place.

Significant life events are great triggers to check your finances – the purchase of a home is generally the biggest purchase we make in our lives – what better time to make sure your financial ‘backyard’ is in order.

Maybe you’ve changed jobs, relocated or retired. Or there’s been the arrival of a new baby, the departure of older kids or you’ve finally decided to save for a new car, overseas holiday.

Whatever your situation, banking and budgeting isn’t just about price – it’s about ease, flexibility and trust.

Access to your money and banking information should be simple and easy, you should have options around product, price and access but most of all you should have a relationship with your financial institution where you trust they will provide what’s best for you when you need it.

Whatever your circumstances, you need your money to be working for you.

  1. Budget health check

Start with a few easy questions. Where do you want to be this time next year? Are you saving for a car?  A holiday? Deposit for a house?

Setting a budget will help you create the savings you need to get there.

The best way to get the ball rolling is to open a high interest transaction account that works for you.

These sorts of accounts help you earn more on your savings but also restrict you from dipping into those funds you are tucking away for your particular goal.

Ask your bank to find an account that suits you, remembering there are heaps of options out there like internet only accounts [1], rewards for behavior with minimum monthly deposits, Christmas clubs [2] and many more.

Many financial institutions are now introducing money manager services which are an online personal financial management tool that allows you to set and track goals online, create savings plans, budgets and integrate this with your bank accounts.

  1. Look after your loans

With interest rates at all time lows, now is the perfect time to consider refinancing and lenders won’t be surprised to see you because the number of loans refinanced over the past 12 months has already increased by a huge 20% as borrowers go in search of the best deal for them.

There are over 100 home lenders in Australia, so there is around a 99% chance that your current lender doesn’t offer the best deal.

Despite this, 46% of people only ever consider their main bank for their home loan [3].

Yet, there are very few situations where shopping around can save you as much money as shopping around for your home loan.

Also, don’t just look at interest rates, look at flexibility like offset account availability, additional repayments and the ability to redraw so that your loan will suit you into the future as well.

Be careful not to extend the life of your loan.  You could be half way through your existing loan term when you decide to refinance.  If this is the case, don’t fall into the trap of refinancing the loan term back out over the maximum term (usually 25 – 30 years).

Consider fixing your home loan. Many borrowers are reluctant to lock in rates as they think it’s rigid and inflexible. These days though, many fixed loans offer the same benefits as variable loans, things like additional repayments, redraw and offset accounts.

So, provided you have no intention of repaying a loan or selling your home within a fixed rate period, now might be the perfect time to consider a fixed rate option.

And finally, check in on any investment loans you have. Over the past couple of months, most of the major banks have increased their interest rates on these loans because of fears that investors are driving up the housing market. Some have temporarily stopped investment lending altogether. A quick call to your lender will ensure your investment loan is sorted for another year.

  1. Digitise Yourself

If you’ve resisted the move towards the digital era, the bad news is you can’t win. The good news is going online is not as hard as you think and it will save you both time and money.

Start by asking your bank for electronic statements.

Paper statements that arrive in the post often come with a hidden surcharge. eStatements simply arrive in your internet banking inbox to be stored until you need them.

Now is also the right time to start using an app [4] to do your everyday banking.

This allows you to transfer money on the run using your phone or tablet from anywhere in the world.

In fact, the amount of banking you can do on your portable device these days, is pretty much endless. Pay a bill, transfer money to a family member overseas, even apply for a home loan – there’s not much you can’t do.

Have you got the latest credit or debit card? Are you using contactless payment methods?

Most merchants now have paywave / paypass and as a means of payment for goods, it is here to stay, mainly because it’s simple, quick and usually the most cost effective way to pay for something.

  1. Wealth – is it where you want it?

Spring is a great time to review your wealth. The new financial year has begun and yet you still have time before the end of December to have everything in place by New Year.

The golden rule with wealth is to focus on your most important asset which is your ability to earn an income.

Half of all Australians don’t believe they have enough money to retire. Yet despite this, we overlook some simple strategies.

For example, how many of us regularly review our home and car insurance but often forget to protect our income?

Another common oversight is superannuation [5]. If you’ve moved jobs, you may have a few super funds, often with small balances.

Now is the time to bring them together so you can maximize your returns and start understanding how to get your super working and growing for the future.

Now is the perfect time to start reaping the benefits of salary sacrifice options. Start by looking at tucking away more into your super or maybe planning for a pre-tax purchase. Good advice that can be worth its weight in gold.

  1. Create a calendar

Tired of forgetting to pay your bills?

Not just the big ones like the quarterly energy and water bills and the monthly credit card payments but the smaller invoices like the lawn mowing man, the babysitter, perhaps a cleaner.

Setting up a regular payment on a calendar takes all the pressure off.

Recurring payments, no matter how big or small, can now be managed through internet banking or a smartphone app.

All you need to do is set up a recurring payment to be made on a nominated date or frequency and the money will automatically come from your designated account on that date.

Importantly, this sort of calendar banking always allows you to log in and see what’s going on and make changes right up to that day of payment.

Do you have any other tips for spring cleaning your finances?