H G living
154 | AUSTRALIAN HOUSE & GARDEN
FINANCIAL
HEALTH CHECK
All set to whip your finances into shape in 2017? Use Money
magazine’s top five strategies for a thorough fiscal check-up.1
Know where your money is going.
A good budgeting app should do the trick.
Pocketbook, available for iOS and Android, is
free to download and can help you stay on track
with your spending. The app links directly to
your bank accounts to create a detailed log of
expenses and savings. By categorising your
transactions – utilities, groceries, food and so
on – the app produces a real-time flow chart to
show you exactly where your money is going.
You can also use the Safely Spend feature to
set dollar limits, to make sure that you stick to
a budget. The app will send you a notification
if you’re coming close to the limit, so there’s no
excuse for overspending. It also recognises
when money is coming in, so any interest or
dividends earnt will be added to your budget.2
Have the right home loan. The wrong
one can cost you thousands of dollars over
the life of the loan. At the time of writing,
the cheapest variable-rate home loan sits at
3.35 per cent. And while the cheapest loan may
not always be best, it does give you something
to compare. Of course, if you’re thinking of
refinancing, make sure to do a break-even
analysis first. Add up all the costs of moving,
including any valuation fees your new lender
may charge, and divide this by your monthly
savings. This will give you the number of
months you need to recoup your costs. If it’s
more than, say, one year, can you be certain that
your new lender will be just as competitive in 12
months? There’s more to a home loan than just
the interest rate. Features such as redraw and
offset facilities can help save plenty on interest.3
Get your credit cards under control.
Making only the minimum repayments
will get you virtually nowhere. You need
to put any extra money you have each week or
month towards your debt. A better option may
be a balance-transfer credit card. You know
the ones, where you pay zero per cent for six
months, 12 months, even 18 months. They can
be a great way to slash debt if used properly.
When comparing offers, be sure to take into
account any annual fee charged and/or transfer
fees, as these could mean that your zero per
cent credit card is not really zero per cent at
all. The tip with these cards is to pay them off
during the balance-transfer period. If not, you
may find that the outstanding debt will attract
a high interest rate after the honeymoon period.4
Take a look at your super fund.
How much do you pay in management or
performance fees each year? Anything
above 1 percent is too much, so if you’re in that
boat, hop out. A difference of just one per cent
in returns can mean a 20 per-cent difference
over 30 years, says the MoneySmart website,
run by the Australian Securities & Investment
Commission, the financial services regulator.
According to the Association of
Superannuation Funds of
Australia, the average
super balance for
someone aged 55 to 59
is $170,393. Reduce it
by 20 per cent and
that means saying
goodbye to more