Ten Steps to
Financial HealthQ:Are there any basic rules that will keep me out of financial
trouble?Answer: The following guidelines, if followed, will give you a head
start on the road to financial health.Work out a budget and stick to it, which means spending
less than you earn. A budget is a detailed record of your total
income and expenditure. So many people say, ‘I don’t know
where my
money goes.’ This will not happen if you budget
correctly; your purse may still be empty, but at least you will
know exactly where the money went! Budgeting is a chore for
everyone, but no matter how boring you find it, it is an
essential first step in managing your finances.Get organised. Start a file for financial matters and
keep your accounts in order.Always save a regular amount of your income – make
that a priority. As the old saying goes, ‘Look after the
pennies and the pounds will look after themselves.’ Small
amounts will build up over time into substantial sums. Build an
emergency fund in case of the unexpected crisis, and a ‘fun’
fund – everyone needs an occasional splurge on a night out or
new outfit. If you are starting your working life, consider
making your own contributions to superannuation; if you are an
older worker, consider increasing your contribution.Have financial goals. Having something to save for,
e.g. a holiday, a car, your own home, will inspire you to
persevere with your budget when the going gets tough.Pay off debts as quickly as possible. Interest rates
charged on loans can mount up very quickly. Always pay the debt
earning the highest interest first.Avoid impulse spending. Don’t buy what you don’t
really need. Before buying an item, ask yourself how many hours
you would have to work to pay for it. For example, if you earn
$15 an hour, you would have to work ten hours to pay for a $150
bottle of perfum.Be careful with credit cards. Credit cards can be a
recipe for disaster, tempting you to buy things you cannot
afford. Credit cards are not free, and the interest rates are
high. Unless you are certain that you can pay your bill in full
each month, the safest option is to do some ‘plastic surgery’
and cut up your credit card/sNever sign a contract or agreement unless you have read it
thoroughly and completely understand its terms and
conditions.Avoid activities or substances that may become addictive,
i.e. gambling, drugs, alcohol or cigarettes. These can very
easily lead to financial ruin, not only for you but also for
your family.
Put your money to work. It’s not much good saving
your money if it is just sitting around in a basic on-call bank
account earning a minute amount of interest. Shop around for the
investment that best suits your needs, taking into account such
things as fees, interest rate and accessibility.
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