How to win a gold medal in cash management
Are you feeling the Olympic spirit run through you? Perhaps a certain sense of national pride? Sporting achievements are fantastic for the reputation of Australia, but what about your own financial achievements? Do you deserve a gold medal in cash management?
Here's how you can top the podium and win the race towards financial security.
1) Make your banking work for you
There's a reason that most of the top athletes in the world have an experienced team working with them. Slogging away at the same old training system or methods of improvement might work for a bit, but ultimately the name of the game is efficiency; and the same is true for your cash management too.
Debt, contrary to popular belief, isn't a bad word for your finances – in fact, it can be the key to taking better control of your money, as long as you don't rely on institutions that have everything to gain from you spending more than you need. Not sure what we mean? Think of it this way: When you ask the banks the best way to save money, don't you think they are a little biased? After all, they are the ones who run their business on the back of your funds!
Rather than relying on traditional methods of cash management, think a little outside the box. With the right debt management techniques, you can end up using the bank's own money for free, while you use your own cash to offset the interest on your own home loan. It's all about the right structure; an interest-free loan attached to a credit card for daily purchases could end up saving you thousands.
2) Don't live the dream beyond your means
There is a catch when you have most of your spending on a credit card.
However, there is a catch when you have most of your spending on a credit card. Just like a runner who pushes themselves too far, too fast, you might find yourself crippling your own financial situation by putting too much of a weight on your repayments.
This is what credit cards really rely on – and the average Australian is falling right into it. According to the Australian Securities and Investments Commission, the average credit card has over $4,350 owing on it, which amounts to more than $730 paid in interest every year (assuming a 15 to 20 per cent average interest rate). Every cent of that is going straight back to your lenders, instead of back into your investment portfolio.
It all comes back down to a simple premise: You can't live the dream beyond your means without putting yourself in financial trouble. A real gold medallist in cash management has the strength of will and the depth of strategy to be able to keep a lid on their debts. When you get control of your money and stop the wastage, you have more money for the good things in life.
3) Keep the laissez-faire away from your bills
Sometimes coasting along with your money is possible without too many problems, and the sheer effort required to stay on top of every little issue can be too much for some. We have all kinds of payments and bills to keep up with these days, but leaving these repayments too late can end up harming your financial future.
Did you know that, according to EY, nearly one in three Australians had missed a payment on their electricity bill over 2014? It might seem like a small little utility bill can't do much damage to your lifestyle – for some people, this might even be the smallest of their financial commitments.
In reality, however, these issues can create an issue for your ability to borrow from lenders, as they impact your credit report. Too many missed payments could end up outing you as an unreliable bill payer, painting you as a risk to your lender. Success in anything, from athletics to money, requires constant dedication. Don't fall behind on the basics, and you won't fall behind in the race to financial independence.
For more tips, tricks and cash management techniques, make sure you have the team of property mentors on your side right here at Think Money.