Financial wellbeing index Q3

The Financial Wellbeing Index measures people's financial wellbeing in relation to six focus areas. Here are the key findings in Quarter 3 (September – December 2010)

•  Aussie households have reported feeling less comfortable across the six focus areas of: credit card and mortgage debt, savings, investments, household income and the ability to pay bills.
• Aussies have shown determination to stay on top of their mortgages, with 49% of households with a mortgage making additional loan repayments.
• Credit card debt has increased substantially – up 24% from Q2 to Q3.

the over reliance on credit cards is a worrying trend and we encourage everyone to look to savings as a way to buffer against unexpected costs.

For assistance with budgeting, setting up a savings plan or financial planning for a secure future, speak to one of the financial planners at Intellichoice today.

Budget for Success

Keen to save more and make a big dent in your mortgage?

By budgeting better, you can reach your goals sooner. Here is a guide to get your New Year started in the right direction.

1. Record your expenses

Carry a notebook around with you for a month and write down everything that you spend money on and the amount. Don’t forget daily coffees, magazines, eating out, etc. Record it all.

This will show you how much you’re spending and may prompt you to realise how much you spend on non-essential items.

2. Calculate your income and expenses

Calculate how much income you make after tax every month and write this figure down. There are a number of good budgeting tools available on the internet to help you easily track your expenses. If you can’t find one, just use a notepad.

Divide your expenses into those that are essential (for example, groceries, bills and transport costs) and those that are non essential (for example takeaway food, entertainment and indulgent purchases) and calculate how much these cost you each month. For example, if your quarterly electricity bill is usually $450, you will need to divide this figure by three to get monthly cost of $150.

When this is done, subtract your expenses from your monthly income. This will show you whether you are spending beyond your means or whether you have some cash to spare.

3. Change your spending habits

To free up some cash to make extra repayments on your home loan or achieve or financial goals, you will need to scrutinise how much you are spending and work towards reducing this amount.

The non-essential expenses column is the first place to start cutting back, If you are spending a lot on takeaway food, start eating at home more often and pack your lunch to take to work.

If your petrol costs are high, consider taking public transport or walking if possible. Perhaps you could invest in a bicycle so you save money and gain a health benefit at the same time.

4. Stick to your budget

Once you have allocated a budget to each of your expenses, stick to it. If you have budgeted to spend $60 a month on eating out, make sure you don’t spend any more.

It will take discipline, but by following your budget you could cut thousands of dollars interest off your loan and pay your mortgage off much sooner.

Savings Tips

Here are some savings tips to help you on your way:

• Have an easy access cash account for everyday needs with a debit card attached
• Save a fixed amount of money every pay in a separate account
• Save your pay rises, bonuses or special payments or tax refund
• Put your change into a savings jar at the end of each day
• Pay your mortgage fortnightly and pay an extra 5-10 per cent on your mortgage every month
• Budget a specific amount for leisure, mortgage repayments and personal expenses
• Make extra superannuation contributions from your pre-tax salary otherwise known as salary sacrificing.