We’re not always reading at the same level when it comes to financial literacy. Talking about money can often feel like a social taboo, and the lack of formal financial education accessible for most Australians doesn’t help. We frequently have questions or rely on what our parents taught us, which isn’t always sufficient to get us feeling confident in taking control of our finances.
To be fair, talking about money may be tough. This might be due to a variety of things, including money scripts we learned as children, current views about wealth, cultural or familial pressures, a lack of resources, or simply not knowing where to start. However, if you want to get financially fit, you’ll have to bite the bullet and start asking the hard questions.
- Do you spend more money than you make?
- Do you have a good handle on your debt?
- Do you think you’d be able to handle a large unexpected expense?
- Do you have multiple superannuation accounts?
Whether or not you’ve worked with a financial planner before, it’s important to understand how getting your basics in order might benefit you.
This quick money-smart Q&A can help you gain a better understanding of your financial situation and get back on track:
1. Do you spend more money than you make?
We’ve all done it, but if you’re routinely spending more than you bring in, you’re likely adding to your debt rather than saving anything. If this describes you, it’s time to address your debt-to-income ratio and get your finances in order. There are a few programmes that can provide you a thorough picture of your income, spending, and saving habits.
2. Do you have a good handle on your debt?
We all utilise our credit cards at some point since we don’t have enough cash when we need it. That’s fine if you stay on top of your payments and pay off the entire balance owed. However, if you don’t know how much debt you have and you’re paying interest on your credit cards every month, you’re at risk of financial shock. Check your credit card balances, contact your financial institution, and work out a payment plan to pay it off.
3. Do you think you’d be able to handle a large unexpected expense?
Because life throws us curveballs when we least expect it, having an emergency fund is a valuable safety net. We’ve all been there: our car breaks down, we become sick and need pricey dental work, or we find ourselves unemployed for a period of time.
You’ll want to be ready when the metaphorical hits the fan. You may not be able to put more than $10 to $20 into your emergency money savings account each pay period, but it will add up over time and be available if you need it.
4. Do you have multiple superannuation accounts?
If you don’t choose a super fund when you start a new employment, your mandatory super contributions will most likely go to a MySuper default account. And if you’ve worked at several different jobs over the years, you’ve most likely accumulated two or three distinct super account balances. By having several super fund accounts and tripling up on expenditures like as administration and management fees, Australians lose $2.6 billion per year.
Register for the Australian Taxation Office’s online services via myGov to check your super. This will allow you to view all of your super accounts, even those that you may have misplaced or forgotten about, and have them consolidated into one.
Disclaimer: This article is not intended as legal, financial or investment advice and should not be construed or relied on as such. Before making any commitment of a legal or financial nature you should seek advice from a qualified and registered Australian legal practitioner or financial or investment advisor.
