7 steps to better manage your money

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These eight simple steps will make your money work harder for you − and help you on your way to a decent nest egg.

  1. Review your expenditure

Put your lifestyle under the microscope.

“When it comes to your expenditure, it’s vital to separate your wants from your essentials,” says Bessie Hassan, money expert at comparison site finder.com.au.

“You can do that by looking at all your outgoings − from petrol to groceries, to transport and rent,” she says. “And then you can see where you can cut corners on costs without compromising on the quality of your lifestyle.”

  1. Be smart with your mortgage

There are tricks to squeeze the most out of your biggest financial commitment. Consider making more frequent payments (e.g. every week rather than every month), using a mortgage offset account, and making the same repayments even when the mortgage rate goes down.

“These are small things you can do which won’t necessarily have a big impact on your lifestyle, but can have a big impact on your mortgage and ultimately take years off the life of the loan,” says Alice Del Vecchio, Head of Mortgages at HSBC.

  1. Start a saving habit

Setting up an automatic transfer is a great way to get in the habit of better money management. Each payday transfer some money − even a small amount – into another account to build your savings.

“It’s not so much about how much you’re saving, more about becoming disciplined about money management,” says Bessie Hassan. “This is money that you’re just putting away and forgetting about for a period of time, and you will see it grow over the months,” she says.

Look out for accounts that offer bonus interest rates for depositing a certain sum each month.

  1. Read the fine print

It’s important to read the fine print for all of your financial products − especially insurance and mortgages − so that you understand exactly how they work. 

“There are lots of cashback offers, lots of rewards and promotional offers out there. Weigh up what it means to you in the medium to long term. Sure, a cash injection sounds attractive, but will you be paying for it in another form in the long run?” Hassan says.

  1. Make time to reset regular payments

Often your work and life get in the way of pulling out your bills (gas, telephone, internet, health insurance etc) and having a close look at your financial situation. 

“Be persistent when it comes to getting the best deal," Hassan says. "You can do this by jumping online, it’s available to you 24/7 and lets you compare the different options.”

  1. Pay in advance

Once you’ve set some cash aside you can use it to ask for a better price by paying in advance. Money magazine suggests:

  • Prepaying for education at non-government schools, where the discount may be as much as 3 per cent for prepaid fees;
  • Arranging car insurance through Progressive before your current policy expires;
  • Reserving parking spaces in the CBDs of big cities.

When it comes to buying foreign currency, keep an eye on the daily exchange rates with a view to exchanging several days before you leave. 

  1. Make friends with the taxman

The taxman doesn’t have to be your enemy. Claim all possible allowances at tax-return time and make sure you’re not clobbered by the Medicare levy.

Keep up to date with what you’re entitled to from Human Services − whether it’s Family Tax Benefit, Child Care Benefit or any other entitlement. If you’re about to cross a threshold, you may want to bring forward some tax deductions in a given financial year to stay below the cut-off point. 

And remember, it’s empowering to stay on top of what you’re spending - and what you’re entitled to.