Sure bet on your finances

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MILLIONS of people will have a flutter on the Melbourne Cup tomorrow in the hope of making a few quick dollars on the race that stops a nation.

Research from the latest Asteron Lifes Risky Nation report shows punters spend an average of $29 on the big race, but wagering a few extra coins on the horses for most would be better spent elsewhere.

By reining in your spending and finding a few extra dollars each week to tackle debts or save or invest, you put yourself on track for a much fitter financial future.

Heres some ways you remove those fiscal barriers by maximising your cash.

EVERYTHING YOU NEED TO KNOW ABOUT CREDIT CARDS

PAY DOWN DEBT

AMP financial planner Andrew Heaven says tipping a little extra cash onto your debts is the front runner when it comes to handling any extra money you have.

And be sure to focus on debts with the highest interest rate first.

Every dollar you save on interest is money you are paying off towards the capital,’ he says.

Credit cards attract the steepest interest rates with many plastic deals slugging customers with interest rates north of 20 per cent.

Channel 7 presenter Edwina Bartholomew is conservative when it comes to managing her finances and says she pays of her credit card every month.

The bank keeps on offering to extend my limit but I always leave it at $5000 so Im not tempted to go over my maximum,’ she said.

Personal debts are usually next on the to-pay list interest rates are often around the 10 per cent mark followed by the cheapest form of debt which is usually home loans.

Mortgage rates are at historically low levels and are lingering around the four per cent mark so pooling your money onto your home is another sure bet.

On a $300,000 30-year loan with a variable rate of 5.1 per cent, by tipping in an extra $10 a week you could pay off your loan 17 months earlier and save about $18,200 in interest.

MLC principal adviser Neil Dyson also suggests parking money in a mortgage offset account which acts as a day-to-day transaction account to reduce your overall home loan costs.

INVEST YOUR CASH

Depending on what you are investing your cash in Heaven says growth assets such as shares and managed funds are a good place to start.

The minimum investment typically is usually $1000 and then the regular commitment is usually about $100 per month,’ he says.

It is getting into the habitat of investing on a regular basis and if you do it incrementally and in smaller amounts you dont miss it as much.

Parking your cash in the bank in either term deposit or online savings accounts will deliver you low returns many around the two per cent but can be handy if you need to access the cash for an emergency.

Dyson says always aim to have between $2000 and $10,000 available at any given time which is good in an online savings account in the case of an emergency.

GROW YOUR RETIREMENT SAVINGS

Planning for life after work is often not high on the agenda for younger Australians but by tipping a little extra money into your nest egg each week you can make a significant difference.

The Association of Superannuation Funds of Australias chief executive officer Pauline Vamos says the benefits of compound interest are huge.

If a 30-year-old retiring at 65 tipped additional cash into their super she says it could mean the difference in living a happier retirement.

If you put $25 towards your super next week rather than on the Cup favourite, and then continued to do this once a week, you are looking at approximately $120,000 more in your super by the time you reach retirement age,’ she says.
And every dollar that you put in super before you turn 35 could be worth around seven dollars in retirement.