Top 5 Financial Habits
Can you believe we’re already through the first part of the year. We hope you’re going OK.
Considering the events of the last year, we thought it might be a good time to do a bit of a financial check-in, by asking our Tribeca Tribe for their top financial habits that we should all consider putting in place.
They came up with a Top 5.
Automate your finances
This is a great tip, as it makes it so much easier for you to stay on top of your cashflow. The key here is to set up an automated structure for your banking that manages your day-to-day spending and saving habits – and takes those ‘do I or don’t I?’ decisions out of your hands.
The basic idea is to set up your bank accounts so every payday, money is transferred into separate savings and discretionary spending accounts. Direct debits are also used for all your essential expenses such as utilities and rates so everything is accounted and budgeted for every month. Set up correctly, this structure should lead to less worries with cashflow, and more savings in your bank account.
We have plenty of other helpful tips and resources to aid your cashflow and take charge of your finances. Learn more.
Prepare for the unexpected
Automating your finances also has another benefit, in that it forces you to put money away for those unexpected situations. At Tribeca, we advise all our clients to have at least three months salary available if needed, whether that’s a buffer for an emergency, short-term funds for a business or investment, or to know you have added protection to cope with the emotional ride of a fluctuating stock market.
We can set up this structure to make it easier for you to build up these cash reserves, as well as regularly touch base with you to make any changes and help keep you on track.
There’s many other ways we can assist in creating a flexible financial plan that can adapt to whatever challenges or opportunities life presents.
Stay on top of debt
In some ways this is the easiest goal – as everyone has the power to do it. But in a lot of ways it’s the hardest, as it takes a strong and unwavering commitment.
Minimising your debt gives you:
- greater control over your finances which is incredibly important to your wellbeing
- frees up money for savings and investing
- makes it easier to make life decisions (taking that trip, investing in that opportunity, leaving that job or retiring)
So that takes us to your credit card. We are big on not using a credit card at all, and definitely not using your credit card on general expenses. This is a big trap, just like credit card reward points which are a false economy. A good rule of thumb is: If you can afford to pay that expense off your credit card every month, you’re better off using cash in the first place.
If you don’t feel like you can get the scissors out to your credit card straight away, there are other things you can do to reduce your debt, such as changing over to a 0% balance transfer offer which can save you thousands in interest while you chip away at removing the balance.
Debt management is one of the many areas of advice we can help you with. Learn more here.
Review everything annually
And we mean everything – mortgages, insurances, utilities, telcos, loans.
Banks and other services rely on their clients’ apathy and loyalty. Don’t let them. Consider just saving a half a percent on a home loan. On a million dollars, half a percent is a very big chunk of change that you’re giving to the bank in extra interest that you could be keeping for yourself.
We know reviewing your expenses can be painful, but it can be well worth it with potential thousands of dollars out there to be saved, especially if you haven’t checked your circumstances for a while.
To make this process easier for you we’ve created a Bill Comparison Quick Links Guide
Look after your financial wellbeing
We talk about financial wellbeing a lot. And we don’t apologise for that, because we think it’s so important. If you can achieve a healthy relationship with your finances, the feeling of security and freedom of choice that flows from this cannot be underestimated – both for your financial and mental wellness.
Looking after your financial wellbeing can start by simply talking to a trusted advisor, establishing some goals and a plan to get there, and taking positive steps to your financial future so that you can move forward with a greater sense of purpose and confidence.
It’s hard to put a value on this.
Read one of our recent articles that looks at why financial wellbeing is so important and ways can you strengthen it.