Is there a budget-related goal among your new year’s resolutions? How did we guess?! Yep, the beginning of a year tends to mark the time when we attempt, once and for all, to get our finances in check. But, says ME Bank’s Head of Deposits and Transactional Banking, Nic Emery, our efforts are often thwarted by the money lies we tell ourselves. Here’s some money management advice from Emery, to help you overcome those money mistruths and get you on top of your finances for 2017…
Money lie 1: “I deserve a treat. YOLO, right?”
“Research by ME shows almost half of Australians make impulse buys because… well, you only live once,” says Emery. “It’s fine to treat yourself occasionally, but be sure to budget for the cost. One in ten YOLO spenders have racked up debt as a result of their habit, so if you do indulge in the occasional impulse buy, aim to pay with cash or a credit card.”
Money lie 2: “I’ll pay off my credit card in full… next month”
“Why not THIS month? We often have good intentions, but chances are something crops up that sabotages the best-laid plans to clear credit card debt. The thing is, every month you continue to have an outstanding card balance, you’re wearing interest charges that make it harder to clear the slate next month,” says Emery. “The best approach is to knuckle down and pay as much as you can off the card each month, and skip the urge to reload the card with fresh purchases until you have a zero balance. Check the rate you’re paying, too. It’s a lot harder to pay off a card charging a super high interest rate.”
Money lie 3: “I can’t stick to a budget – it’s impossible!”
“OK, so a budget’s not working. Time for a different strategy: try the ‘pay yourself first’ technique,” says Emery. “You only have to make one decision, which is: what proportion of your income can you save? If you feel you can save 5 per cent of each pay packet, set up an online transfer to shift this amount out of your everyday account and into a separate savings account. The remaining 95 per cent is yours to spend – just don’t touch the 5 per cent. Before long you’ll build up healthy savings without feeling the pinch.”
Money lie 4: “I wouldn’t have money issues if I earnt more”
“We have a tendency to increase our spending in line with a payrise. So it’s not about how much you earn but what you do with your money that shapes your financial wellbeing. A useful first step in taking control of your money is to know where it goes. There are plenty of apps available that make it easy to see just how much you spend each day. It’s a great starting point to understanding how to make the money you have work harder.”
Money lie 5: “I’ll never be rich”
“Sadly, most of us won’t ever be billionaires, but that doesn’t mean you can’t be financially secure,” says Emery. “Straightforward strategies like spending less than you earn, making a commitment to growing savings, and aiming to pay off debt that’s backed by here-today-gone-tomorrow purchases, are the cornerstones of achieving financial security. It means having control of your money today without worries about any curveballs that you may encounter in the future.”
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