Finance Your Budget It’s spring! Time to clean up your personal finances

It’s spring! Time to clean up your personal finances

Bringing a bucket and a mop to your personal finances can result in thousands of dollars worth of savings. Photo: Getty
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September usually heralds the start of warmer weather, longer days and a seasonal clean-out of our homes.

But beyond whipping out a duster in a show of springtime TLC, money experts say the same approach can be applied to personal finance.

Finder money specialist Taylor Blackburn said polishing up an assortment of financial staples can help households get a true sense of their spending and  boost their cash flow.

“We’re almost 100 days until Christmas, so now is a great time to get ahead of that extra spending – and the first place to start is looking at budgets and non-essential costs,” Mr Blackburn told The New Daily. 

With that said, here are some tips on how to tidy up the wallet.

Develop a budget and track your spending

Paramount Financial Solutions principal Wayne Leggett told The New Daily the first step that comes to mind when spring-cleaning personal finances is to create an easily achievable budget.

“You ask most people as an adviser to tell you where they spend their money, and they can’t tell you – so tracking expenditure to know where your money is actually going can make better use of it,” Mr Leggett said.

With numerous online programs available that can help households make sense of their bank account records, the task of developing spending and savings goals is easier than ever, he said.

The pandemic’s onset propelled a rush of spending on entertainment goods as Australians braced for months of confinement in their homes.

However, that trend dampened over the first few weeks of lockdown.

Mr Blackburn said a recent Finder survey showed positive signs that households were taking a more conservative approach to discretionary spending, with 37 per cent of Australians expecting to spend less on fashion, while half now preference eating in over dining out.

Ditch and switch on bills

As covered previously by The New Daily, consumers who loyally stick by their providers – whether on insurance, energy or telecommunications bills and financial products, including loans and savings accounts – become prone to paying a ‘loyalty tax’.

But shopping around and having conversations with existing providers can lead to hefty discounts, cashback offers and other incentives.

Reducing interest accruing on a $400,000 home loan by 30 basis points could result in a $66 monthly saving – and more than $23,500 over the life of the loan, according to recent Canstar analysis.

Although assessing products like home and contents or motor insurance is in “people’s best interest”, Mr Leggett said households must first consider any caveats.

“Often, there are reasons to retain personal life insurance – health considerations and the implications of those notwithstanding – because recent changes in the law means, for an awful lot of people, their existing product is probably better than anything else currently available,” Mr Leggett said.

Unsubscribe from ballooning costs

Subscriptions in isolation may seem relatively inexpensive.

With households juggling numerous streaming, magazine and newspaper subscriptions that share similar kinds of content, Mr Blackburn said it’s a recipe for “throwing money away.”

“Subscription services are so prevalent and become a mindless fiddle that just keeps accruing, so it’s best to get a handle on what accounts you have and see if there are any you can live without,” Mr Blackburn said.

Tackle debts before they spiral out of control

Australians have applied a renewed focus on paying down mountains of debt through the early stages of the recession.

Not only did household savings soar by $42 billion over the June quarter, but a record-setting $5.7 billion of credit card debt has also been wiped from Australian accounts since April (more than double the previous comparable period).

With Australian credit card debt at levels not seen since 2006, cutting down interest payments has become a new national past time.

Mr Leggett said there are two ways to approach outstanding debt.

For younger consumers without a home loan, transferring outstanding credit card debts to a low-rate credit card or zero-interest balance transfer card can be helpful – so long as repayments are made on time.

But households with a mortgage may be better served by consolidating their debts, Mr Leggett said.

“If you have equity in your home that the bank is prepared to lend you – and that’s generally if you’re still happily employed and anything up to 80 per cent of its value – then it makes sense in most instances to take higher interest debts and repay using that equity,” Mr Leggett said.

Take advantage of a booming second-hand market

With Australians jostling to stretch their money further and boost cash flow amid a climate of rising job losses, selling unwanted items has proven a popular way to achieve both of those goals.

Research from online second-hand marketplace Gumtree found the value of Australia’s second-hand economy sits at a record $46 billion – $3 billion more than any previous year.

The site estimates Australians have, on average, roughly $5800 worth of pre-loved trash waiting to become someone else’s treasure.

Mr Blackburn said plenty of money can be made by selling neglected items that would “otherwise sit around the house collecting dust.”

“The secondary market has opened for a lot of people who previously didn’t realise it was there, and anything from an old bike to sporting equipment, old clothes and electronics could have an interested buyer who’s willing to pay for them,” Mr Blackburn said.