By Barry Winwood
It seems intuitive that financial concerns would be one of the leading causes of stress in modern society
. In fact, a 2012 Australian study found that financial hardship is such a potent stressor that it may be associated with physical changes in a part of our brain involved in decision making and emotional reactions. Yet, for many of us financial pressure has simply become an unavoidable way of life.
Money may not buy happiness, but the link between financial strain and psychological well-being is undeniable. Therefore, it should come as no surprise that adopting proven financial strategies may not only improve your financial position, but may have a beneficial impact on your psychological wellbeing.
At this time of the year many people are lamenting the debt they built up over Christmas and promising themselves to sort out their finances this year. If that’s you, here’s some practical advice from Andre Thane that might help you get a better grip on your financial destiny.
By Andre Thane
Financial challenges are one of the largest causes of stress for families and individuals.
This has little to do with how much you earn or how wealthy you are, it is purely a product of how disciplined you are, how you manage your money and the advice you get regarding your money matters. If you do nothing else this year, at very least make a pact with yourself to get your financial mindset right.
Below I have included 3 financial ‘hacks’ that may start you to think a little differently about your finances…
Use a separate account for all your ongoing bills.
Bills come in whether we like it or not, and they can accumulate indiscriminately. If you are finding it difficult to cope with the influx of bills during certain times of the year e.g. Christmas or mid-year rates, it would be beneficial to run a separate ‘bills’ account where you can deposit a set amount every month to cover your annual bills (total annual bills, divided by 12), and that way, you will always have funds available, even in the months when bills are high.
Use your credit card wisely.
Credit cards are your proverbial ‘double-edged sword’. On one hand, they give you access to the banks’ money for up to 60 days without interest, during which you can use those funds for other useful things like sitting in an offset account (please see below) or a bank account earning interest.
On the other hand, if the interest free period expires, the cost of credit cards is generally the most expensive form of debt that you can enter into. Most people who are in financial stress can generally associate their problem with credit card debt. So, while credit cards can be somewhat useful, and sometimes profitable, paying interest on credit cards is a very poor financial decision in most cases. So, put simply, always pay your credit card off within the interest free period.
If credit card debt is already there, you may consider a $0 balance transfer card to allow you the leverage of clearing the debt without interest. Please note that it is very unwise to add to the debt on these cards, and most have fixed periods of $0 interest.
Use an offset account to pay your mortgage down quicker.
An offset account is commonly offered by the banks to mortgage customers. This is an ordinary account, much like a savings account. However, every dollar in the account is offset against your mortgage on a daily basis, thus giving a lower interest bill every month, and therefore every payment you make is paying off more principle than it otherwise would. Offset accounts are commonplace; however, you will need to ask for one from your bank.
Thane Financial Services offers a full suite of financial assistance including Financial Planning, Accounting & Mortgage Broking.
Please visit our website to review our businesses too – financialservices.thanegroup.com.au