Money Smart tips

Let's be 'money-smart'!
72% of Australians believe if they don't get 'money-smart', they will be left behind financially. To help you become 'money-smart', we've highlighted some of the best buying and savings hacks you can implement.


Buying strategies


Progressive upgrading

Unfortunately, many of us won’t be able to afford our dream home straight off the bat. But, instead of feeling discouraged, the key is to remain optimistic and try another approach. In the Evolving Great Australian Dream Whitepaper, 1 in 4 Australians said they purchased an affordable home in the first instance and then ‘progressively upgraded’ into bigger and better properties over the years.


Apartments instead of houses

Data shows that, on average, apartments sell for less than houses. As such, an increasing proportion of first home buyers are opting for an apartment rather than a house. This transition into apartment living is a long way from the ‘traditional Great Australia Dream’ of owning a free-standing, suburban house on a quarter acre block.


Moving to more affordable suburbs

According to the Evolving Great Australian Dream Whitepaper, 20% of Australians bought further from the city than they would have liked simply because a property is more affordable in the outer suburbs. At the end of the day, if property ownership is your goal, sometimes you have to make various sacrifices in order to make those dreams a reality.


Rentvesting

Rentvesting is the act of buying an investment property where you can afford and then rent in the area you wish to live. Data from Mortgage Choice shows this is becoming an increasingly popular method with first time buyers, with as many as 30% buying an investment property before an owner occupied dwelling. So what’s the benefit of rentvesting? Rentvesting gives buyers the chance to get on the property ladder and build equity in a property, all whilst having the freedom to live in their desired area.


Buying with family & friends

Co-buying property with a friend or family member has become an increasingly popular purchasing method amongst first home buyers in recent years. Data from Mortgage Choice shows 1 in 10 Australians have co-bought with someone else in order to get their foot on the property ladder. But while there are many benefits associated with co-buying property, it is vital that anyone thinking of entering into this arrangement seek legal counsel before heading down this path. You want to have proper contracts in place that detail exactly who is responsible for what – as this will protect all parties involved.


Moving in with parents to save

Living with family is a great way to reduce day-to- day expenses and ultimately free up some of your cash flow – cash flow that can then be injected into your savings account, where it will form part of your future home deposit.


“First home buyers have long found it hard to take their first step into the property market. Saving a deposit, and having finance approved are two of the big hurdles they face. But while it is hard for first home buyers to take that first step, it is not impossible.

Diligent spending and saving combined with a little elbow grease and some well thought-out property strategies, ensures first home buyers can still achieve their property ambitions.”

John Flavell, Mortgage Choice CEO

Saving strategies

One of the best and easiest ways to save money, is to simply reduce the amount of money you spend. Of course, reducing your spending is often easier said than done. If you have trouble reducing your spending, try implementing a weekly or monthly budget.

List all of the expenses you have and what money you need to spend each pay cycle and then try and save the rest.

By drafting a budget, you will find that there are some simple and easy areas where you can cut back.

No one is born with a deep understanding of finance. In order to develop your knowledge base on all things savings, it’s important that you do your research. Just as you shouldn’t buy the first house you inspect, you also shouldn’t open a savings account with the first institution that comes to mind.

Go online, check comparison websites, stay abreast of current affairs, read reputable blogs, subscribe to YouTube channels.

These are all great resources to help you discover what finance options are available to you.

As Albert Einstein said, ‘doing the same thing over and over and expecting different results is the definition of insanity’. So, if you’ve attempted the same savings tactics with little success, try something new. If you find it too hard to leave your savings untouched in one particular account, try opening a new account with a different institution that doesn’t offer a transaction card. Out of sight, out of mind, right?

You may also want to consider term deposits. This is a great way to ensure your savings remain untouched while still earning interest.

When was the last time you did a home loan health check? If you’re in an interest only product, are you sure you’re getting the sharpest rate? When was the last time you looked at your superannuation balance? Are you sure your provider is delivering you with the best results?

The reality is, you cannot answer any of these questions accurately if you don’t review your financial situation on a regular basis. Review your finances at least once a year and keep a daily eye on your spending and saving habits.

 

Close that Excel spreadsheet. Today, there are a number of apps you can download for your smartphone or tablet that will allow you to put together a budget and savings plan.

These apps will track your incomings and outgoings and categorise them accordingly, allowing you to see where you may need to cut back in order to save more.

 

If you’ve taken all the steps you can towards becoming a better saver, or, you simply want further advice why not seek professional assistance?

Consider approaching a mortgage broker who can provide you with a home loan health check, or, speak to a financial adviser who can help you grow your wealth.

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