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Sometimes it can take a sudden surprise to remind ourselves what’s really important, especially when it comes to our finances. As many Australians have discovered over the course of the last 18 months in lockdown, now’s an excellent time to take action and take steps to improve their relationship with money. 

Taking the first step can be tricky, especially if you’re not certain where to start. Regardless of your financial circumstances, it never hurts to start small, and start simple. To help get you off on the right financial foot, check out our top four tips for using your money more positively in 2021: 

Build up your emergency fund 

If 2020 taught us anything, it’s that you never know when an emergency is going to land. Perhaps you’ve heard of an ‘emergency fund’ in the past, but never thought to kickstart your own? According to research, 29% of Aussies are now focusing on building their own emergency fund, so why not make 2021 the year you start building your own? 

Having an emergency fund at your disposal can help you avoid relying on your credit card when disaster strikes, and gives you peace of mind knowing that you have a cash buffer available in the event of a sudden cost. The amount you need to have in your emergency fund can ultimately depend on your own circumstances, expenses and living costs, however we typically recommend having at least $7,000 to $10,000 tucked away for a rainy day. 

Kickstart your debt-free journey 

Whether it’s a credit card you’ve had for years or a personal loan you’ve neglected to pay off properly, make this the year you finally get debt-free for good! Depending on the type of personal debt you have and the terms and conditions of your lender/s, you’re going to need the right tools to do it. 

For instance, if you’ve racked up a large sum on your credit card, you might want to consider a balance transfer credit card to help you pay it back without worrying about additional interest or hidden fees. On the other hand, if you have multiple debts, it could be worth looking into a debt consolidation loan, which helps you to combine all your debts into one place – making a single repayment each month instead of multiple repayments. 

When you’ve worked out your plan of action, you’ll next need to build a feasible repayment plan to meet your payments on time and on budget. This might involve taking a look at your current budget and figuring out how much you can contribute toward your debt each month – once you’ve got your repayment amounts figured out, you can start chipping away! 

Separate your money from your emotions 

It’s no secret that an all-too-easy way to reward or comfort yourself after a tough day is a cheeky bit of online shopping, but this kind of thinking could see you forking out thousands every year. In fact, according to this 2021 Report, the average Australian is spending over $2,172 a year on comfort spending. 

There’s a saying that goes ‘don’t reward yourself the same way you cope’, so it could be worth taking the time to separate money and your emotions more. While this would mean finding alternate ways to treat and look after yourself, at the same time you’ll be improving your relationship with impulsive spending, and won’t  feel tempted pull out your debit card to feel better after a hard day.  

Budget consciously to invest in the things you enjoy 

Continually spending money when you know you shouldn’t, or impulsive spending, can cause feelings of serious guilt over time. But what if there was a way to indulge in a little retail therapy every now and then without the regret? It all comes down to knowing exactly where your money is going every month, which means you’ll need to budget. 

Take note of all your bills (fixed expenses) and discretionary expenses (variable expenses) for the month – this will give you an insight of how much needs to be set aside each time you get paid. It’s also worth making note of the amount you want to contribute to your savings or emergency fund, as dipping into these funds will get in the way of hitting your savings goals. 

Once you have a good understanding of your expenses, set aside an amount each month for ‘fun spending’. This is money that you can spend on whatever you want, whether that’s your favourite takeaway, online shopping or a relaxing spa day! Having this money ready to go (and set aside only for this specific purpose) means you can absolutely enjoy small luxuries, without worrying about having enough money for the important bills.

Want more ideas on how to manage your money better? Check out the Homestar Blog! It’s filled with a range of tips and tricks to save, manage your home loans and answer your finances questions.  


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.