In today’s fast-paced world, managing personal finances has become increasingly challenging. Many individuals find themselves struggling to make ends meet, falling into debt, or failing to achieve their financial goals. One effective tool that can provide clarity and control over one’s finances is tracking expenses. In this blog post, we will delve into why tracking your expenses is important and how it can pave the way to financial well-being.
Awareness and Understanding: Tracking expenses offers a clear picture of your spending habits. It helps you become aware of where your money is going and provides insights into your financial behaviors. By meticulously documenting every expenditure, you gain a deeper understanding of your spending patterns, allowing you to identify areas where you can make adjustments and potentially save money.
Budgeting and Goal Setting: Once you have a comprehensive overview of your expenses, you can create an effective budget. Budgeting ensures that your income is allocated to various categories such as housing, transportation, groceries, entertainment, and savings. By setting realistic spending limits for each category, you gain control over your finances and avoid unnecessary overspending. Additionally, tracking expenses enables you to set meaningful financial goals, such as saving for a down payment, a dream vacation, or retirement. Without tracking, it is challenging to gauge progress toward these goals.
Debt Management: Tracking expenses plays a crucial role in managing and reducing debt. It helps you identify unnecessary debts, such as high-interest credit cards or loans with unfavorable terms. By tracking expenses and analyzing your spending, you can develop a strategic plan to pay off debts systematically. Tracking also highlights the progress made in reducing debt, providing a sense of accomplishment and motivation to continue on your financial journey.
Financial Decision Making: Tracking expenses empowers you to make informed financial decisions. It helps you evaluate whether you can afford a large purchase or if it would stretch your budget too thin. Additionally, it enables you to compare prices, find better deals, and negotiate effectively. With a clear understanding of your expenses, you can make choices that align with your long-term financial objectives.
Conclusion: Tracking your expenses is a fundamental practice for achieving financial well-being. It provides awareness, facilitates effective budgeting and goal setting, identifies wasteful spending, aids in debt management, prepares you for emergencies, and empowers you to make informed financial decisions. By implementing expense tracking in your daily life, you take control of your finances, reduce stress, and pave the way to a more secure and prosperous future. So, start tracking your expenses today and embark on your journey toward financial freedom.
When it comes to managing our finances, we often seek out professional advice to help us make sound financial decisions. However, not all financial advisors are created equal. While some may follow conventional methods, others may be mavericks who are willing to take risks and think outside the box to help their clients reach their financial goals. In this article, we will explore why you need a maverick financial advisor and how they can benefit your financial well-being.
What is a maverick financial advisor?
A maverick financial advisor is someone who thinks differently and is willing to challenge conventional wisdom in order to find new and innovative solutions to financial problems. They are not afraid to take risks and often have a more creative approach to financial planning than traditional advisors.
Maverick financial advisors are not just limited to those who work independently. They can also be found within larger firms or banks that encourage creativity and outside-the-box thinking. In fact, some of the biggest financial institutions in the world have maverick financial advisors on their staff.
Why do you need a maverick financial advisor?
They can help you achieve your financial goals faster. Maverick financial advisors are often more willing to take risks and pursue unconventional investment opportunities. This can lead to higher returns on your investments, which can help you achieve your financial goals faster.
They can help you navigate complex financial situations. If you are facing a complex financial situation, such as estate planning or tax issues, a maverick financial advisor can provide you with creative solutions that you may not have considered before. They can help you navigate these complex issues with confidence and ease.
They can help you see the bigger picture. Maverick financial advisors have a knack for seeing the bigger picture and understanding how all the pieces of your financial puzzle fit together. They can help you develop a comprehensive financial plan that takes into account all aspects of your financial life, from your retirement savings to your insurance needs.
They can help you break out of a financial rut. If you feel like you are stuck in a financial rut and are not making progress towards your goals, a maverick financial advisor can help. They can provide you with fresh ideas and strategies that can help you break out of your rut and start making progress towards your financial goals.
They can help you adapt to changing circumstances. Financial markets and circumstances are constantly changing, and a maverick financial advisor can help you adapt to these changes. They can help you adjust your financial plan as needed to ensure that you are always on track towards your goals.
How to find a maverick financial advisor
If you are looking for a maverick financial advisor, there are several things you can do to find one:
Look for advisors with unconventional backgrounds. Maverick financial advisors often have unconventional backgrounds, such as experience in fields outside of finance. Look for advisors who have experience in areas such as entrepreneurship or technology, as these individuals may have a more innovative approach to financial planning.
Look for advisors who are willing to take risks. Maverick financial advisors are often willing to take risks and pursue unconventional investment opportunities. Look for advisors who have a track record of taking risks and achieving positive results for their clients.
Look for advisors who are passionate about their work. Maverick financial advisors are often passionate about their work and genuinely care about helping their clients achieve their financial goals. Look for advisors who have a genuine passion for financial planning and a desire to help their clients succeed.
Australia has a long and proud history of agriculture, with the country’s vast and diverse landscapes providing ideal conditions for farming. In recent years, owning a farm land has become an increasingly popular investment for Australians, and with good reason. In this article, we’ll explore why owning a farm land in Australia is a smart move.
The Australian agricultural industry is a major contributor to the country’s economy, generating billions of dollars in revenue each year. Owning a farm land provides a stable source of income, as well as potential for growth and expansion.
Food Security
As the world’s population continues to grow, there is an increasing demand for food. Owning a farm land provides Australians with the opportunity to contribute to food security, both domestically and globally. With the country’s reputation for high-quality produce, Australian farmers are well placed to meet this demand.
The picture is familiar – a couple, steaming mugs in hand, watching the sun rise over rich pastures while a gentle morning mist slowly evaporates to reveal grazing cattle. The couple exchange a smile of contentment: another day in paradise.
For one short moment you wonder who in their right mind would trade life on the land for the rat-race of the city.
Alright, now take the romance out of it and look at the reality – the business of farming is tough!
It’s a business of extremes – extreme highs countered by extreme lows. It’s a business of cycles charted by the seasons – years of abundance interrupted by the unavoidable threat of drought, flood, fire or other natural disaster our great continent is famous for.
The hard truth is that it’s estimated the average farming business faces crop failure or significant stock loss roughly one year out of every six.
Is farming really different from any other business?
In any commercial venture, strategic planning to help you ride out the rough times is essential. Remove the emotion of land-ownership and the family traditions that accompany farming and you’re left with a business that experiences good times and bad, profitable years and years of loss; and as with any other business, running a farm is expected to be profitable.
The business of farming is often difficult to view in such impersonal terms; after all, working the land tends to ‘run in the family’. It’s a legacy passed from generation to generation. But it is a business nonetheless. It exists to supply a commercial demand while producing an income for the people who work on it. It puts food on the table, pays for the children’s education and funds retirement – just as you’d expect of any other business.
Regardless of the nature of that business, successful operators plan ahead and surround themselves with skilled people. For example, you’re expert at raising beef cattle but at what stage were you supposed to become a tax expert as well?
Which leads neatly into an interesting point: although people who work the land tend to display a marked willingness to offer assistance to others, they rarely seek assistance for themselves. Many place unfair expectations on themselves by attempting to ‘go it alone’.
The business of running a profitable farm involves specific issues and complexities but there’s no reason you should feel you’re alone when trying to get your head around topics like:
budgeting and cash flow,
tracking income and expenditure,
managing taxation, wages and superannuation.
Let’s return to the stats for a moment. If the odds are that one in six farming years may result in a financial loss to your business, doesn’t it make sense to put a plan in place that helps ride out these years?
A tailored plan is crucial to success
A financial plan, tailored to the particular business of your property, can mean the difference between borrowing through the tough times and treading water in the good; or having reserve funds for the lean years and surplus for savings and business growth during the productive years.
Timing is also vital. Not planning early enough may mean that your business decisions are triggered by events over which you have no control. Planning early puts you in command and increases your options.
If you could assemble a business strategy that structured your property so that it produced higher income, wouldn’t you be interested?
Development of an appropriate business plan provides strategies for:
stock/produce sales and purchases,
stocking rates,
seasonal planning,
succession planning.
Consider these points:
Budgeting – like any business owner, farmers understand this requirement first hand. It might be handling household expenses or managing the costs of the property. Identifying needs from wants is paramount to keeping operational costs under control.
Many events that impede profitability are outside of your control which raises the question of contingency planning – what you can do now to prepare for these events.
Wealth creation sets up your future. A business with sustainable profitability, even in less lucrative years, will enable you to plan your life through each of its stages from raising a young family to retirement and beyond.
These issues are the same as those faced by the lady running a cafe or the local plumber. The difference lies in the experience and background of the professionals they have behind them helping them to achieve their goals.
Now, picture this: a sweat-stained man returning to the homestead after an honest day’s graft on the land. He may appear alone, but he has a trained army at his back and a plan for the future.
Insurance plays an important role in any wealth creation and management strategy. There is little point in accumulating wealth if you don’t protect it, or yourself, from unforeseen risks that can undermine the best made plans. Just as your wealth creation strategy needs to be reviewed on a regular basis, so too does your wealth protection plan.
Every stage of life brings exciting challenges along with different types of risk. Let’s look at the most common scenarios. You may see yourself in some of these stories.
At this stage, a young person’s greatest asset is their ability to earn an income, so this is a good time to learn about income protection (IP) insurance. This usually replaces up to 75% of income in the event of serious illness or injury. It can provide much-needed financial assistance during recovery, as was the case for Sean.
Sean is 24 and works full-time, having completed his carpentry apprenticeship. He enjoys riding motorbikes, playing football, and helping out his parents. On one occasion Sean slipped off a ladder while cleaning the gutters of his parents’ house, fracturing his right leg in two places. Fortunately, because his father’s financial planner had advised Sean to insure his income, Sean’s Income Protection (IP) policy paid 75% of his monthly income after only a month off work. This money enabled him to meet his financial commitments while he took another two months off to allow his leg to heal fully. And just as importantly, it allowed Sean to return to his chosen profession as a carpenter.
Young couples will face similar risks as young singles, but are more likely to have higher debt obligations. This is when a combination of Life, Total and Permanent Disability (TPD), Trauma and IP cover should be considered to provide financial support in the event of death, disability, illness, or injury. This insurance will pay lump sums that can be used to replace lost income, extinguish debt, and cover medical expenses; as this young couple found out.
Todd and Kate had been together for three years and were busy planning their life together. They had already purchased a home, and a dream wedding was only months away. Their financial planner had recommended the couple take out life insurance when they bought their home. On her way home from the gym one afternoon, Kate’s car was struck by a speeding truck and she was killed instantly. Kate’s policy gave Todd a lump sum that enabled him to pay out their mortgage, relieving him of one less worry at this awful time.
Young families
Often families in this life stage have one spouse working full-time, whilst the other may work part-time or not at all to focus on parental responsibilities. At this stage, families often have greater debt levels including a mortgage, and are heavily reliant upon the full-time income. Stress tends to be high during this period of life, so what would happen if the breadwinner were to die suddenly, or suffer a debilitating disease that prevented them from working for an extended period of time?
Adequate insurance coverage is essential to be able to replace income, cover medical expenses, extinguish debt, and allow the family to maintain the lifestyle to which it is accustomed. Families with young children may also consider an additional feature of most trauma policies which allows families to include their children. This cover provides a lump sum to help pay for medical expenses and allow parents to have time off work to care for a sick child, as detailed in the following case study.
Matt and Rebecca are 30, have been married for five years, and have a two-year-old daughter, Chloe. Matt works full-time as a building surveyor. Rebecca works part-time as a legal secretary, giving her time to spend with Chloe. After Chloe’s birth, Matt and Rebecca’s financial planner suggested they add $200,000 in child trauma cover to Rebecca’s personal trauma policy. Following a prolonged period of sickness and extensive testing, it was revealed that little Chloe was suffering from Non-Hodgkin lymphoma, a type of cancer. Fortunately, because Chloe was covered by Rebecca’s trauma policy, her parents could afford to take extended leave from their work, allowing them to be by Chloe’s side throughout her treatment and recovery. The payout was also a source of funds to pay her medical expenses.
Pre-retirees
Pre-retirees can also be referred to as ‘empty-nesters’, as their children have generally flown the coop by this time. They are also usually debt-free (or close to it) and have the sole objective of preparing for retirement. While they may be well-placed to achieve their objectives, they are also least likely to be able to afford any adverse changes to their plans.
With age comes a greater risk from a range of events and illnesses including heart attack, stroke or cancer. For this reason, it is important that appropriate insurance coverage is maintained to help keep retirement plans on track. A combination of Life, TPD, Trauma and IP can provide protection against these unexpected events, and deliver financial security pre- and post-retirement, as John and Judith discovered.
John and Judith are both 61 and chose to take extended leave from work to start travelling before retiring. Starting from their hometown in Port Macquarie, they planned to take four months to travel by caravan to the tip of Cape York and back. The couple was enjoying a visit to a local winery near Cairns when John had a seizure. He was rushed to hospital with results revealing that he had experienced a stroke, and would suffer permanent mobility impairment, restricting him to a wheelchair. Luckily for John and Judith, they had elected to continue John’s TPD policy until age 65. This policy paid a lump sum of $500,000 which was more than enough to get them and their caravan back to Port Macquarie and make the necessary modifications to their home. There were also funds left over to enable John and Judith to enjoy an early retirement, albeit closer to home.
Retirees
The key goal of all retirees is to enjoy the fruits of their labour. Whether self-funded or receiving government support payments, the need for insurance has generally diminished as retirees no longer have an income to protect, nor do they usually have a lot of debt. However, not everyone is the same, and insurance reviews at this life stage are just as crucial as any other time.
Many insurance providers recognise that a person’s insurance needs change over time, and include life stage options as part of their policies. These options provide an opportunity to increase sums insured without additional underwriting, and sometimes with limited evidence. Examples of life stage events which can trigger increases on Life & TPD policies include: marriage, the birth or adoption of a child, and taking out or increasing a mortgage.
Whatever your age or stage in life, insurance delivers valuable peace of mind that you and your loved ones are financially protected from misfortune. But it’s not a “one size fits all” solution. To ensure your wealth protection is appropriate to your needs, talk to your licensed adviser.
Paul Taylor was a fit and active 45-year-old who drowned while swimming in surf on a family holiday. Witnessing this tragic event unfold from the beach were Paul’s wife, Sue, their 15-year-old daughter Sophie and 12-year-old son Zac.
Relatives and friends were a great support during the following days, but soon after the funeral, and still in a state of profound grief, Sue had to assess the state of the family finances. Until that time she wasn’t aware that the Taylors were amongst the 95% of Australian families that did not have adequate levels of life insurance.
Sue, Sophie and Zac are far from alone. Over 8,800 Australian men and women in the prime parenting age bracket of 25 to 50 die each year. All up, one in five families will experience either the death of a parent, or a parent will suffer a serious accident or illness that prevents them from working. It is not unusual for families in these situations to lose half or more of their incomes.
But these cold numbers fail to convey the more profound impacts that the loss of a parent has on a family.
At first glance, the Taylors were doing well financially. A few years earlier Paul had been promoted to an executive role earning him a high salary. This had allowed the family to move into a lovely new home close to the private school Sophie and Zac attended. Sue ran the kids’ taxi service and worked part time, putting her income towards the annual family holiday fund.
Paul and Sue were the first to admit that they enjoyed a wonderful lifestyle. However, underpinning that lifestyle was a large mortgage with repayments that soaked up a significant portion of Paul’s income, and his untimely death was to have far-reaching consequences.
Ongoing private school fees would also be well beyond her reach. This presented Sue with a traumatising but unavoidable conclusion: she would have to sell their home, move to a more affordable suburb, get a full-time job, and enrol Sophie and Zac into a public school.
With no professional guidance, and not thinking clearly under the enormous stress, Sue took the first offer on their home and sold well below what the property was worth. Her sole focus was to get rid of the mortgage.
The human consequences
It would be easy to say that this was the end of the story. Yes, the family suffered a significant drop in living standards and the children missed out on a number of experiences they would otherwise have enjoyed, but Sue, Sophie and Zac were not left destitute. Sue managed to put a reasonably secure roof over their heads, and the kids continued with their education, albeit at a different school.
However, the crucial part of the story lies in the emotional impact of the loss of a parent.
Sophie was in the middle year of high school when her dad died. The shift to a new school at a critical point in her education left her with clinical depression. This is a shockingly common problem, afflicting nearly 70% of children who need to change schools for financial reasons. And while Zac avoided the devastating effects of depression, despite Sue’s best efforts to give him a normal life, he felt he had to grow up fast to fill his father’s shoes.
Paul’s death also had a financial impact on his parents. Despite being age pensioners, they did their best to help Sue provide some extras for Sophie and Zac. And with Paul being an only child, his parents would miss out on the support he had planned to provide as their need for care increased.
Why were they unprepared?
While the cost of life insurance is the most common reason people give for not taking out adequate cover, Paul’s failure to protect his family was due to a combination of factors.
Feeling fit and healthy, he expected to live a long life. This is despite accidents and suicide being the most common causes of death during the key parenting years. And while he didn’t entirely view life insurance as unimportant, with a demanding career it simply wasn’t something Paul thought too much about.
What might have been?
Partnering up. Taking out a mortgage. Having children. Each of these events should have sparked a little voice in Paul and Sue’s heads saying: “take out life insurances”. And with each major change in their situation, that little voice should have piped up: “review your life insurances”.
Why? Well, the obvious answer is that this would have allowed Paul to leave the family with enough money to pay off the mortgage, cover school fees through to the end of high school and to provide a regular income to meet ongoing living costs.
But the real answer is that it would have dramatically reduced the risk of Sophie’s depression, eased Zac’s sense of obligation to grow up quickly, and relieved Sue of an enormous burden. It would have helped maintain both Sue’s and the children’s friendship groups and left Paul’s parents with the knowledge that everyone was taken care of.
Making it happen
Life insurance does come at a cost. And yes, a good policy will cost more than a bad one. It can be complicated, and it requires some careful thinking about a topic that many would rather avoid. All up, it’s something most people give little thought to.
But life insurance is also incredibly important, and there is an art to getting the balance between cost and benefits just right. It is therefore essential to consult a licensed financial adviser who thoroughly understands your personal circumstances, can present you with options and explain the consequences of your choices. Money alone won’t cure grief or fill the hole created by the loss of a partner or parent, but it can provide protection against a great deal of other pain. Death and disability often strike without notice, and if, like 95% of Australian families, yours is underinsured, now is the best time to do something about it.
The FBAA Board of Directors recently congratulated PJ Patterson, CEO and Founder of Intrepid Wealth for reaching another milestone with his 5th year of membership with the Association.
Since 1993, the FBAA has been the voice of brokers, working to protect the integrity and ethics of our industry through innovation, education, representation and advocacy.
PJ’s loyalty to and involvement with the FBAA was commended by the FBAA board, their staff and fellow members.
We would like to thank the FBAA for their ongoing support and commitment to the broking industry’s growth and success.
As with any goal, your financial goals should be SMART – Specific, Measurable, Achievable, Relevant, Timely.
Whether you’re wanting to build an emergency fund, get out of debt, or save for a specific goal, write down your goals in detail and then revisit these regularly to remind yourself of what you’re working towards.
August: Set your Budget
A budget helps you see what’s coming in, what’s going out and most importantly how much you have to allocate towards your goals.
There are plenty of free templates online so find one that works for you and add in your personal income and expenses.
Tip – Go through your last three months’ bank statements to get details of your spending.
Example – If you want to save $2,000 for Christmas by December 1st, you’ll need to set aside $154/week from September 1st.
Tip – Automate savings by setting up a regular transfer.
October: Super Check
It’s time to health check your superannuation:
Contact Details
Make sure your contact details are up to date to ensure you’re not missing out on important correspondence.
Beneficiary Nomination
Do you have a current beneficiary nomination in place? A valid beneficiary nomination will direct your super fund on how you would like your super benefits to be paid, if you were to pass away.
Fees
How much is your super costing future you? There are a whole range of fees that might be funded from your super, including administration, investment, and adviser service fees, all of which will have an impact on your retirement savings.
Investment
Do you know how you’re super is invested? Is it Conservative or Growth? How well has it performed over the long term? Some important things to consider when choosing an investment option include your life stage, investment horizon and comfort for risk.
November: Insurance Review
There are a range of insurances that offer financial security for you and your family, including:
Life
Total & Permanent Disability
Trauma, and
Income Protection
This month, get to know your current insurances and consider whether the types and amounts are suitable for your needs.
December: Estate Planning
Estate Planning involves documenting what you want to happen in the event you pass away or become incapacitated. It might include Wills, Powers of Attorney, Health Directives and Guardianship nominations.
If you don’t have these in place already, it’s time to build out your Estate Plan. If you do, it’s time to dig these out for a review.
Post-pandemic economic shrinkages coupled with the Russian invasion of Ukraine in early 2022 have seen inflation spike to the highest level since the Great Inflation of the 1970s.
This surge in inflation has prompted the Reserve Bank of Australia (RBA) to increase cash rates, making it difficult for new homeowners, with the situation looking to deteriorate before it improves.
What can we learn from the rise of inflation and consequent interest rate spikes that plagued the 1970s and 1980s? Let’s find out.
The interest rate cycle and the economic cycle are intimately connected, and interest rate changes should, in theory, follow the economic cycle. Central banks raise interest rates to slow down the economy and avoid inflation if the economy is growing rapidly and inflationary pressures are increasing.
Global inflation sharply increased from 2% to 6% from 2021 to 2022. This was much higher than the inflation targets set by central banks in advanced economies and emerging markets. Economists predicted even higher inflation to come and further cash rate rises to slow down the economy.
What does this mean for interest rates?
Interest rates are typically increased to curb the rise of inflation and ease it back to within the range of inflation targets, which is around 2%. By raising interest rates, the Reserve Bank hopes to deter consumer spending and limit the purchase of high-risk assets, such as real estate.
Since 2009, we have seen modest inflation and more importantly record low-interest rates. This gave consumers spending power that became easily taken for granted.
How does this compare to the 1970s?
However, the onset of the COVID-19 pandemic and shortages of commodities, like wheat and gas caused by the Russian invasion, saw inflation rise higher than expected.
The rapid inflation rise in the 1970s was due to oil shortages in 1973 and 1979. The shock in oil prices saw interest rates climb to nearly 20%. Before that, economies had enjoyed a relatively stable level of inflation – similar to what we’ve experienced over the past decade.
The 1970s started with a home loan interest rate of 5.88%. The average home cost between $17,000 and $25,000, and banks would loan 2.5 times the amount of a person’s salary to buy their first home.
An average 40-year-old with a yearly income of $8,200 could take out a loan of $20,500 to buy their home and confidently pay it back within a few years.
Fast-forward to 2022 and Australia’s average house price is $920,100, the home loan interest rate is 2.63% and the average yearly salary is$87,070.
Mortgage stress rates
The difference between housing prices and income is now 10-fold, and banks will not support the huge multiplier difference between salary and property price because it puts them at a much bigger risk.
In March 2022, according to Digital Finance Analytics, around 42.2% of mortgaged households were assessed to be in financial distress in Australia. Households are labelled as in “mortgage stress” if they continuously spend more than their net income.
This spells trouble for the housing market as more individuals struggle to pay their monthly mortgage.
Tips and strategies
How can you tackle high interest rates and keep more of your hard-earned money?
Take out a personal loan with a low-interest rate to consolidate your credit card debt. This will assist you in saving money and paying off debt. The average interest rate on personal loans is often lower than credit card interest rates. For example, the average credit card interest rate was 16.31% as of 31 May 2022, while the average personal loan interest rate was only 10.28%.
Take out a debt consolidation loan. This can be an effective way to consolidate several debts and another way to avoid high interest rates. The new loan should ideally have a lower interest rate than the one you presently have.
Talk to your financial adviser. They can provide expert advice to assist you with debt management and help with cashflow and budgeting.
Credit cards certainly make life easier – they are simple to use, accepted almost everywhere, and help you to buy what you want, when you want, particularly online. So much so that living close to the credit limit has become the norm for many people and spending can quickly get out of hand.
To make sure your credit card works in your best interests, use these tips to stay on top of your debt.
Routine is key
We all know how easy it is to let things get away from us. Just like that power bill sitting at the bottom of the stack of mail on the bench or “accidentally” bingeing an entire Netflix season while the laundry piles up, we tend to postpone boring, albeit important, tasks. Create a routine, though, and you’ll complete these jobs simply out of habit.
If organisation skills are not your forte, why not take advantage of the many apps and services designed to help? ‘Mint’ is one of the many useful apps available that will organise your spending into categories, helping you ensure there is always cash to go towards your credit card repayments.
Making use of automatic payments in your banking app can also be helpful. Payments will be made on time and best of all, once set up, you don’t have to lift a finger!
Cash advances cost more
When money is tight, people are forced to use their cards for cash advances (withdrawing cash) instead of just purchasing goods and services… and in doing so, are paying a high price for the privilege.
Interest is charged immediately on a cash advance and at a higher rate than purchases. Even if you have an interest-free card, you will immediately start paying interest as soon as you withdraw cash using your card. If you must take cash off your card, repay it as quickly as possible.
Emergency funds will save the day!
You’ve probably heard about the importance of emergency funds, and with good reason! If we’ve learnt anything over the course of the COVID-19 pandemic it’s just how quickly things can change, particularly within our economy. So, whether it’s an increase in the cost of living or a rise in interest rates, it is vital to have a bit of spare cash handy.
A good place to start is with an emergency fund calculator. It will consider your income, savings, and living expenses, and provide an estimate of how much spare cash you should be saving for a rainy day.
Realistically, many of us couldn’t get by without our credit cards, but it is vital that we use them in a way that only provides a benefit to our lifestyle. The secret to credit card success — keep your spending responsible and pay the full balance off every month; otherwise, the only winners are the banks.
