Now that we’ve been working from home for two weeks (and for many of us a couple more), we’ve more or less gotten into a groove with work and supervising kids. If you’re now looking to be even more effective with your money, here are some financial tips during lockdown.
Review finances
A review of your finances – your assets, liabilities, income and expenses will highlight opportunities to optimise your financial position. You may have credit card debt or personal loans which could be restructured to lower interest rates to pay them off sooner. Or you may want to know what options you have when your fixed-rate home loans expire? Now could be an ideal time to re-fix your loans before any potential rate increase with little to no break-fees.
A chat with your mortgage broker could identify any opportunities, which ultimately means more money for you. Your broker may also help consolidate and renegotiate debt payments if you are struggling with your finances due to lack of work or cuts to work hours.
Rationalise financial products
Many of us have multiple credit cards, home loans, bank accounts, car loans, or personal loans with ongoing monthly fees and higher than optimal interest rates. Some of us don’t even like to think of our finances because we have created such a complex web of products for ourselves.
Rationalising the number of accounts, closing down unused ones, and consolidating loans could help you save on monthly fees, interest costs, and reduce financial complexity. This is something your broker may also be able to assist you with.
Review credit card expenses
A diligent review of credit card statements can be eye-opening (if not eye-watering!). Be honest with yourself to see if monthly subscriptions on your credit cards are still adding value to your life. Are there any plans you no longer need or can get better value from?
You may have also noticed reduced spending from fewer work lunches and takeaway dinners, and lower petrol, transport, childcare, clothing and entertainment expenses on your most recent credit card statements. Make an effort to put these savings towards any higher interest rate debt you have, or increase your savings fund.
Redo budget
Now that you have a clearer view of your new streamlined expenses and savings, draw up a new budget you can stick with each month. Write down your monthly income and expenses, making sure that these are relevant to your life and something you can maintain.
Review financial goals
In the long term what are your financial goals? How much do you need for retirement and what will life look like?
In the short term, this may translate to committing to a savings account each month; consolidating credit card or personal loan balances; or taking the next step to grow your investment portfolio. A chat with your financial adviser maybe a good place to start to see what is best for you.
Improve financial literacy
We all benefit from learning something new, or being reminded on what we know we need to do. Dedicating some time each week to reading a book or listening to podcasts in financial literacy or personal growth could help keep you on course and get to your goals sooner.