Our early years are usually spent with plenty of freedom, disposable income, and beautiful things. These are normally the years we make awesome memories and where we learn that hindsight would be a wonderful thing for us all to have. Money can be a life lesson we learn the hard way. We aren’t taught about our personal finances in school or the impact not being financially aware can have on our future. Not everyone is good with money and it’s usually a taboo topic that isn’t talked about with friends. Educating young people on the importance of finances and getting them into good habits, could set them up for life!
We’ve put together a list of 10 things we wish we knew about money sooner. It is never too late to break back habits and set yourself up for a successful future.
Be aware of your credit file
Your credit file can negatively impact your ability to borrow money, limit your options significantly and, in some financial roles, impact your chances of being employed. Some lenders will not lend to customers who have defaults on their credit files, while others may charge you higher interest rates for the increased risk you now represent. Keeping on top of your debts and ensuring your credit file remains clear gives you back the choice.
Learn how to use a credit card the right way
We probably should’ve listened when our parents told us not to rely on credit cards, but sometimes we need to learn the hard lessons our self. When we are young we tend to use credit cards for clothes, holidays, socialising and day to day living, while the older generation are using them for travel and major repairs. If you are sticking to a budget and clearing your card in full every month, it is not a negative way to earn points and budget. However, when you begin to rely on the credit card and live beyond your means, it can see us get into debt.
Be certain before you apply for finance
Defaults on your credit file aren’t the only thing that lower your credit score. Repeatedly apply for loans or credit cards with lots of different lenders can put multiple credit enquiries on your credit file. This can be viewed negatively by lenders because it looks like you’re ‘shopping’ for credit. Make sure you do your research, speak to a specialist, and ensure the application you submit has a relatively good chance of being approved.
Save for rainy days
When we’re young, we don’t like to plan to much for the future or worry about the unexpected events that might happen. It is always a shock when your car or washer machine breaks and it’s harder to ask your parents for money. Putting a percentage of your pay into a savings account can help reduce the stress of the unexpected bills.
Learn to budget
As we get older, the bills start to increase. Suddenly there’s rent or a mortgage, gas, electric, petrol, food shopping, car insurance, health insurance and the list goes on. In our business, we need to detail our customers living expenses in their applications. A lot of people we speak to do not know what they spend monthly. Having a budget makes you aware of your spending. Has your electricity bill increased? Is your car insurance expensive? Is your bank charging you too much interest? This will help save money and make sure you are getting competitive deals.
Learn to stick to your budget
Making a budget is easy, it’s sticking to it that’s the hard bit. We will spend too much at times and deviate away from the budget, but being aware of it and sticking to it some of the time is still better for your bank account.
It’s harder to get out of debt then it is to get in it
It is no secret getting into debt is a lot easier than getting out of it. For example; By making minimum repayments on credit card debt of $7,500, it can take you up to 23 years to pay it off in full. Debt can be expensive, and you should put a lot of consideration into what you incur before applying.
Reduce impulsive buys
The expensive holiday, Louboutin’s or designer outfit can always be paid off later. When we fall in love with these things, logical thinking can be forgotten. In your 20’s they become a necessity, not a treat. Think logically, if you can’t afford to pay for it, should it be purchased on your credit card?
Do your research
When we’re first offered a credit card or loan, it is easy to get excited and forget to ask the important questions. How much is it going to cost me? What are the fees involved? Is there a better way to fund the purchase? If you are unsure, ask someone you trust. Get them to make sure you’re getting a competitive offer.
Be aware of your superannuation
I have to be honest, when I started working I didn’t care about Super at all. It was going to be 40 or 50 years before I’d see that money, what did it matter? Having spent years in the finance industry I know now it matters… A LOT!!
An ABC article confirmed the Senate report found 1 in 3 women retire with nothing, that’s scary! Although the gender pay gap is still unfortunately alive and well, there is also a big Superannuation gap. Australian women are retiring with just over half the amount of super as men and one in three retire with nothing. As women, it is important we are aware of these statistics and work to change them. Be aware of your Super and speak to an expert to help you retire carefree and fabulous!
Credit Representative 490860 is authorised under Australian Credit Licence 389328 www.finarc.com.au
This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances.