If you paid as much attention to your personal finance as you do to your personal trainer, you’d be kicking financial goals. Imagine if you were dropping debt instead of dropping burpees. Many Australians pay exorbitant fees for personal exercise trainers, but when it comes beefing up their bank accounts, they tend to put it into the ‘too-hard' basket.
Personal finance trainers can be pretty damn life-changing too and here are five things they want you to know.
Stop Using Payday Loan Companies
If there’s one thing that will dig you into a financial hole, it’s borrowing money from payday loan companies. You might have seen the TV commercials being thrashed with “borrow the money now and pay us back when you get paid”. The payback period is short, and the interest is high, so you are paying back more than you borrow. If you’re using your wages to pay back loans you’ve borrowed to cover future wages, you’re going to end up in a vicious circle.
Create A Budget
Make a list of everything you spend on a weekly basis. These are things like accommodation expenses—mortgage or rent, electricity bills and food. Once you’ve done this, set up an automated payment of 20 per cent that is directed into a high-interest savings account. This will become your emergency fund. Most financial experts recommend having a minimum buffer of three months savings should you get made redundant or experience damages from natural disasters.
Be Smart About Your Financial Goals
It’s good to have financial goals but by applying finance coaching tools used worldwide for goal setting, you can ensure your goals are:
- Specific—I want to be debt free is too generalised. Use specific goals like I want to clear my credit card debt.
- Measurable—Assign monetary values to your goals. E.g., I want to pay $200 off my credit card a week.
- Attainable—If you're a student fresh out of home with a part-time job, $200 a week off your credit card may not be attainable. Make goals that aren’t going to leave you struggling to keep up with your commitments.
- Relevant to you—Make your financial goals something you’re excited about achieving.
- Timely—Give yourself a realistic deadline. Without setting finite dates, you’ll find you may keep stretching those goalposts further and further into the future.
Personal Finance Trainers Are Not Just For Affluent People
You don’t have to be well off to use the services of a personal finance trainer. You may just need help to restructure a new home loan or need advice on how to structure salary sacrificing so you pay less tax. Perhaps you want to figure out how you can become a first homeowner, or what grants and government initiatives are available to help you get out of the rental rut. Whatever stage of your financial journey you are in, you can benefit from having a personal finance trainer.
Take Advantage Of Salary Sacrificing
This is a benefit many Australians fail to take advantage of. Salary sacrifice is sometimes referred to as remuneration or salary package and if structured correctly reduces tax and generates savings. A portion of your wages is withheld by your employer and it can be added to your super fund, used to pay off a loan, or even mortgage or new car.
Now check here on how to be financially savvy when moving out of home for the first time.
Design credit: Dom Lonsdale
Gerry Incollingo is the Managing Director of LCI Partners in 1998, an established accounting, finance and legal firm based in Parramatta. Since that time, the firm has expanded with six divisions and is now based in Sydney, Parramatta, and southern Sydney.