On the face of it things are pretty good in Australia right now. Three key economic indicators – interest rates, inflation and unemployment are all very low. So it’s a concern that working Australians feel less confident about their personal finances than they did two years ago.
According to new research by AMP, less than one in two (48%) of us are confident about our financial wellbeing – down from 54% in 2014. One in four working people say they are financially stressed and have trouble making ends meet.
The same study identified common triggers of financial stress, notably missed bills, debt repayments and the ongoing need to save for retirement while providing for a family.
Life is expensive, and it’s a fair bet you think if you earned an extra few thousand dollars, you’d be okay. But you know what? You probably wouldn’t.
After more than 30 years in the money business I have no doubt it’s not how much you earn that matters, but rather, what you do with your money. So let’s take a look at a few commonsense steps that really work when it comes to maintaining control of your cash.
It all starts by knowing where your money goes. The free TrackMySpend app, available through the MoneySmart website, is very handy here, providing a clear idea of daily spending patterns. This alone can be quite an eye opener.
Once you know your regular spending habits, it’s easy to get cracking with a budget. Just seeing how much money is flying out the door can help to identify money leaks and areas where you can plug the gaps by cutting back.
Don’t think you can’t have fun along the way. A good budget allows you to enjoy your money yet still enables you to save. And saving is essential because having a pool of spare cash to your name can be a big boost to financial confidence.
Set yourself a few goals to aim for too. AMP found 80% of workers have some financial goals in mind, but less than one in five of us have a plan of action to achieve them.
If you’re aiming to grow retirement savings for instance, consider talking to the boss about making salary sacrificed contributions to super from your before-tax wage or salary.
If you’re stressed about bills, work out how much you can realistically save each pay day and set up an online transfer of cash into a dedicated savings account. You may be surprised at how quickly your slush fund grows, providing back-up money for household bills and unexpected costs, and bringing more control – and less stress – to your financial future.