Money Tips 21 to 30 Explained
Money Tips 21 to 30 Explained (#MoneyTips)
Time for my third set of 10 money tips to gain an explanation. I have posted my money tips to Twitter (using the hash tag #MoneyTips) and found that some of them were very hard to keep within that magic but annoying 140 character limit. So far I have managed it, however sometimes a little of the meaning seems to get lost, and occasionally I wanted to add a little more explanation. This is where I do it.
Money Tips 21 to 30:
So, the third set starts off with a slight duplication of #21 (so glad I can count!). Again there is no real order to them, unlike most things I do. As always these, along with past and some future ones, are all listed on the Money Tips Explained page if you are after more.
- Save at least 10% of your net income each pay – invest it.
- Even with Australia increasing the required superannuation it is still not enough. Take responsibility for yourself and build your own nest eg. I consider 10% a minimum savings rate that everyone should achieve. So don’t let a 10% recommendation stop you from aiming for 30%, 50% or even more.
- If you earn under $50k, put extra into Super, the government will chip in too.
- The government has a co-contribution scheme in place that will prove additional super contributions if you ear under $50k. In the best case it is currently 50%. No where else will you find a virtually risk free way to earn 50% on your money in one year. Over a 30 to 50 year working life that could be the difference between a good and great retirement. It could also mean the difference between retiring at 50 and 65.
- Keep your car serviced and tires inflated – you will use a lot less petrol.
- A well serviced car with correctly inflated tyres will not only keep petrol costs to a minimum, it will also help to prolong the life of your car. If there is one simple thing that everyone can do to better use their money it is to keep a car for as long as you safely can.
- Discuss financial plans with friends, they should tell you if it’s a dumb idea.
- Not all friends are suited for in-depth financial discussions. However some will be. Find one who is happy to talk about finance, money and your plans and ideas. Get their input around whether they thunk it is a good idea. Seek out people with more experience that you have. An easy way to save money is not to lose it in the first place from a bad idea.
- Have short (< 1yr), medium (1-5yr), and long (5yr +) financial goals.
- Financial goals are just like any other goals in your life. Having them doesn’t mean you will be successful, but not having them (whether written down or in your head) means you can’t reach them. Set realistic goals and try to break them into smaller goals. Start crossing off some of those smaller goals, and before you know it you will reach you larger goals. Give it a few more years and you will reach goals you previously thought you may never reach.
- If you buy your lunch, check for cheap deals if you buy before 12 noon.
- Firstly I am not saying these are always a healthy options, but they are good financially if you were planning it already. There are multiple shops around me that sell a normal lunch for $9.90 after 12 noon, but only $6 if you get them at 11:59am of before. When I don’t bring lunch, simply eating a little earlier caves me almost $4 that day. If you did that twice a week that is $400 saved. Not bad for just eating a few minutes earlier!
- Salary sacrifice into Super. If you can’t max it out, aim for 15%.
- There are two large benefits with additional super contributions. Firstly you get to put it into super using pre-tax dollars, so your tax rate on the money will be only 15% (rather than 30%+). Secondly you are forced to keep the investment for years which when combined with the lower tax rate supercharges the compound interest effect.
- If you don’t track expenses, start with the larger ones and slowly get smaller.
- Tracking the $2.50 you spend for a can of coke feels like too much effort, but tracking the $300 you spent on a new tennis racket or $800 on a new mobile sounds easier. Starting big will mean less work to capture the largest parts of your spending. You can then work your way down until you feel it becomes unproductive. There are also online tools that can help (when I find a good one I will let you know).
- Always consider the big picture when looking at financial details.
- People often say the devil is in the details, and it can be. But you can save yourself a lot of time if you focus on the larger picture aspects first. For example when comparing finance rates for two car loans where one has a 0.15% lower rate, but the other has an upfront fee, step back and look at whether you could just pay cash for the car. That is what we did.
- Talk to your partner monthly about finances and try to get on the same page.
- Your partner will have more impact on your finances than any other person. It is not enough to agree on things once as life changes. My partner and I discuss finances at least once a week, but aim for at least once a month. Look at how you are going, whether your goals are still realistic, and check if there are any signs of differing directions. Divergence in finances is much easier to fix early (just like almost everything in life).
That is it for another set of tips. Number 28 is one that I have seen both sides of. There was a time when I tracked everything (down to the cent). I think that over a six month time frame there was around $2 that I couldn’t account for. However that started to prove more effort that it was worth. I ended up not tracking cash expenses as much along with paying for more electronically (where tracking is built into the system).