In these uncertain economic times, you need to manage your money wisely. But what are the best ways to manage your money and how can you secure your financial future? Keep reading to discover our top money management tips
Some people like to appear wealthy. They may wear designer clothes but have very little in the way of tangible assets such as property and shares. The genuinely rich actually spend less than what they earn meaning that they can save more of their income and accumulate wealth.
If you fall into the former category and want to take control of your finances so that you can build your wealth and be genuinely wealthy then the first step is to review your bank accounts. When you’re reviewing your bank accounts you need to look at the balance, the bank fees that you’re charged and all your incomings and outgoings. When you know your incomings and outgoings you will know where you can make savings to increase your bank balance.
If you like to use cash then one way to save money is to give yourself a daily allowance. This means that at the start of each week you withdraw money from your bank account and place your daily allowance into your wallet. This is your spending money for the week. Deposit whatever you don’t spend into a money jar and deposit it into an interest bearing account so that the money earns passive income.
Debt can hold you back when you’re trying to take control of your finances. This includes personal loans, credit cards or buy now pay later purchases. These can eat up a huge chunk of your income and make it hard to get ahead financially. If you’re in debt then the best thing you can do is to list all of your debts including any interest. You should then make a note of all the payments.
Credit cards attract high interest so pay these down first. If that’s not possible then look at a debt consolidation. Even if you are still in debt you may be able to save yourself money on interest which could add up, and that’s money that can go towards paying down your debt faster. I
If you’re not risk averse, why not invest the money in shares? The sharemarket can be profitable. Interest rates on savings accounts at major banks range from 0.75% to 1.15%. In contrast, the annual return on the sharemarket can be 7-10% per year. If you invested $10,000 in the sharemarket, in ten years you could have $20,000 which is much more than you would get from savings accounts.
What about property?
Similar to the sharemarket, property can offer an excellent return on your investment. If you own an investment property that you rent out to tenants then your return could be up to 12%. Contributing factors include location, the rental demand in your area, the price you paid for your property and interest rates. 12% is an excellent return and unlike other investments, it is much more secure. What that means is that even if there is a property market crash, you still have the asset whereas if the sharemarket crashes you can lose money. Property is a stable asset and there is always potential to improve it.
Take for example a freestanding two bedroom house, if you have enough land you can add an extra room and then that will increase the value of the property. In some cases it can add an extra $100,000 or you can rent it out for a higher weekly rental value than if you had not added the extra room.
Get the experts in to review your finances
While you may think you know the state of your finances, the reality may paint a very different picture. In these situations you should look at getting a financial planner or a financial advisor to review your finances. A financial advisor is anyone within the financial services sector who helps people manage their finances so that could include real estate agents, tax agents, insurance brokers or property valuers. A financial planner on the other hand is a finance individual who can help you manage your finances. They will work with you to achieve your goals and will help you with budgeting, investing, saving, tax planning, what insurance cover is best for you and retirement savings.
By Libby Shaw