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Budgeting is something that many of us don't like to consider as we think it will tie us down. But if you really stop and think about it, budgeting is simply a means of looking at your income and expenditure and deciding on what is most important to you. Once you identify what you want to achieve, a budget is a tool to help you get there.

Tracking your spending

Where does all my money go? Very few people can answer this question accurately. Learning how and where you spend your money is the first step in managing your finances.

Keep a financial diary

  • Select a defined time period eg a month or 4 weeks;
  • Record all of your spending in a notebook, create as many categories as you need e.g. petrol, lunch, transport etc;
  • Ensure you include small items such as snacks, drinks, parking meters, tolls, donations etc;
  • At the end of the month, use the category totals as part of your annual budget;
  • You may choose to look for any spending that was spontaneous, wasteful or a luxury that you could do without in the future.

How to curb impulse buying

Next time you are tempted by an unplanned purchase, ask yourself:

  • Do I really need it?
  • Will I really use it?
  • Will I still like it next month/next year?
  • Is the price likely to be reduced at an end-of-season sale?
  • If I don't buy it now, do I want it so much that I will make a special trip later to come back and buy it?

Planning a budget

A budget can help you plan your expenses and save for things you want. Managing credit or simply covering expenses is not always easy but following these steps will help you control your finances:

  • Add up your earnings each week (or fortnight or month)
  • Subtract regular payments or basic expenses;
    • Rent or mortgage repayments;
    • Food and household needs;
    • Utilities (phone/electricity/water);
    • Transport expenses (travel passes, petrol, car registration, maintenance);
    • Health needs;
    • Insurance (health, house, car, travel etc)
    • You should include yearly expenses such as car registration and insurance in your budget. You can divide these totals by 52 for the amount to budget for each week (or divide by 26 for the amount to budget each fortnight or by 12 if your budget is calculated on a monthly basis).
  • Subtract regular payments for lifestyle bills and expenses:
    • Entertainment;
    • Clothing;
    • Personal grooming;
    • Home appliances
    • If you are not sure as to how much you spend; either make an estimate and review it after 3 months; or consider tracking your spending for a month.
  • Allocate additional funds to cover
    • Loan repayments;
    • Additional superannuation contributions
    • The amount of money that is left can be used to buy things that you want or to save.

Saving

Saving may appear to be difficult and disciplined, but think of the feeling of being able to afford to buy something you have wanted for a long time. Here are some tips to help you on your way.

Set yourself a savings target

Aim to save 10% of your gross annual income. This breaks down to 5% for short-term goals and 5% for long-term goals.

Tip - the 10% rule

If you've never been a successful saver before, start off slowly. Leave committing to medium or long-term goals for a while until you're confident a saving strategy is within your reach.

  • Set yourself one short-term goal - perhaps 3 months away - that requires only a small amount of cash;
  • Then set aside 10% of your income each week in a separate savings account;
  • At the end of 3 months, withdraw the cash to pay for your small goal - perhaps a weekend away or a new piece of clothing - and if there is any money left over make that the first instalment in your next savings goal.

Develop a safety buffer

The key to successful money management is to put funds aside during the good times and to minimise financial stress during bad times. Remember to allow for unexpected debts and emergencies eg illness in the family, loss or breakage of possessions, career interruptions etc.

Tip - how much is enough?

  • Singles and couples should consider developing an emergency fund equal to 2 months take-home pay in case of retrenchment or emergencies.
  • Those with young families should aim to build up an emergency fund equal to 3 months take-home pay.

Quick budget reminders

  • Don't make your budget so tight that it's impossible to keep;
  • A budget is not set in stone. It is there to help, not hinder you. A sign of a successful budget is one that is flexible during tough times and able to reward you when your prospects are brighter;
  • If you blow your budget one month, try to make up for lost finance in areas that are more flexible e.g entertainment or eating out;
  • Visit your budget every 3 months to see if there are any areas you can tighten up to improve your financial flow.

Download our budgeting spreadsheet.

Managing Your Credit Card

Check these credit card management tips.

Do:

Ask yourself am I using this credit card for convenience or necessity? Consider using EFTPOS where possible (withdraw additional cash at the same time to save on ATM fees)

  • Pay off your card balances each month
  • Look for competitive credit card interest rates
  • Keep a record of any telephone or Internet credit card transactions and keep receipts until the statement comes in
  • Be aware of your credit limit, consider a personal loan if you are carrying a balance regularly

Don't:

  • Be tempted to sign up for a card purely on the basis of the loyalty or rewards scheme
  • Use your credit card if your balance is looking a bit overweight
  • Be tempted to increase your credit limit and thus continue to build greater debts
  • Make too many cash withdrawals from a credit card as charges may be higher for these direct transactions

Buying a Car

Cars can bring mobility, freedom and pleasure. It is important to consider all your options before taking the plunge. Here are some tips to help you when purchasing a car from new or used, insurance and finance options.

Different ways to buy

You can buy a car by

  • Paying for it with your savings
  • Taking out a personal loan to cover all or part of the cost
  • Borrowing the money from the seller (this 'dealer finance' is usually provided by an outside financial institution)
  • Private leasing

Arrange your finance first

If you need a loan to purchase the car, it's best to organise this first before you pick a car you can't afford or rush into a car finance offer. Make sure you have the bargaining power of pre-approved finance when searching for your 'dream vehicle'. To find out about a Car Loan click here click here.

Checklist for selecting the right car

  • Will it seat enough people and carry a big enough load?
  • Does it have sufficient power?
  • Will it do all the jobs required?
  • Can I afford to run and maintain it?
  • Is comprehensive insurance for this model affordable?
  • Will this model hold its value?
  • Is it going to be reliable?
  • Is it safe and environmentally responsible?
  • Am I going to enjoy owning it?
  • Lastly and most importantly, am I letting my heart rule my head?

Examine the whole picture

When buying a car, it is important to look at the whole financial equation, because the purchase price does not represent the entire cost of a car. There's a range of other bills that you can expect either immediately or soon after your purchase. Whether you buy new or second-hand, you will encounter government charges. State governments levy stamp duty and either a registration fee or a transfer fee if the vehicle is already registered. With new cars, there has been a trend towards 'drive-away' prices but many advertisements still put 'dealer preparation charges' in small print. The message here is simple: work out all the charges and make sure they fit into your total budget. A checklist is provided on the next page to help you calculate the real cost. There's also compulsory third party personal insurance to organise and you'll need insurance too. In certain cases, such as when a car is registered in the name of a business, fringe benefits tax may be payable. For information on this, speak to the Australian Taxation Office or your accountant.

What's it worth?

How do you know what the car you are buying is really worth? Simple - do your homework. There are various car magazines, motoring associations and website which will provide a guide to average used car prices.

Buying privately

Buying privately is generally cheaper but it means going without a warranty unless the car is still covered by a transferable new car warranty. You can't compare a range of cars side-by-side (except at a car market) and buying privately often means trudging all over the city to see cars which don't live up to the expectations raised by the advertisements. If buying at a 'car market' - which brings together a group of buyers and private sellers - you must treat the purchase in the same way as a private sale and do all the usual checks. At a market you can do some comparative shopping, and can often do more bargaining.

Double-checking

The majority of people are honest and decent, but you must still double-check everything you are told. If a car is described as a 1990 model, for example, and the paperwork doesn't confirm this, it could have a significant influence on the vehicle's value. Also examine the logbooks or service records to confirm the car has been regularly and properly serviced throughout its ownership.

Used car dealers

If you buy from a used car dealership, it pays to go to a professional, service-oriented establishment which offers a good selection of stock and has a well set-up workshop to perform any repairs which may be required during the course of the warranty. Some car dealers provide NRMA reports. If so, ensure that it is up to date, and then study it carefully to ensure that you understand the condition of the car you wish to purchase.

Auctions

Unless you're feeling very brave or lucky, it's best to leave auctions to the pros. They involve a greater risk, since cars are sold 'as is' and it's usually not possible to perform a thorough mechanical inspection beforehand. Another trap for new players is that the purchasing decision has to be made quickly, which is rarely the best way to make it.

Legal ownership

Is the car encumbered, which is to say:

  • Does the car truly and fully belong to the person selling it?
  • Is it still the subject of a financing arrangement?
  • Has it been used as security on a loan which has not been discharged?
  • If so, it can be repossessed, even though you have bought it in good faith?

The place to check is the Personal Property Security Register (PPSR). The PPSR is a national database that stores details of security interests registered against personal property. To find out more, visit the PPSR website here.

Different types of insurance

There are four basic types of automotive insurance.

Comprehensive
This covers the damage caused to your vehicle during an accident and any damage your vehicle may cause to other cars or property. Many policies include additional benefits such as a rental car while yours is off the road. Driving a car which does not have comprehensive insurance is putting yourself at great financial risk.

Third Party Property
This covers the damage you might cause to other vehicles or property in an accident. Damage to your own vehicle, however, is not included. It's better than nothing but still leaves you exposed to losing the entire value of your car.

Third Party, Fire and Theft
A more expensive version of third party property insurance, this will cover your car if it is stolen or damaged by fire, but not if it is involved in an accident.

Third Party Personal
This is also known as compulsory third party (CTP). It is obligatory in all states, though there are different methods of paying for it. Third party personal insurance covers the injuries sustained by victims of an accident. It does not cover property damage and, technically speaking, doesn't cover a driver who is 'at-fault'. However, many companies now offer CTP policies which include 'at-fault' drivers. These are well worth considering.

Arrange Your Insurance Before You Pick Up Your Car

Protect yourself and your new asset - make sure it's insured before you take it home.

What is a direct debit?

A direct debit is an agreement or contract between a member and a merchant (biller, supplier, service provider) which allows the supplier to debit the member’s nominated bank account. When, as a customer, you set up a direct debit, you are setting up an agreement between yourself and the merchant. You give that supplier permission to electronically withdraw a nominated amount from your bank account on a date you request and at regular intervals. You will give your bank account details (BSB and account number) to the merchant to allow them to debit your bank account regularly to pay for the services they provide you.

What is a recurring payment?

Recurring payments are regular payments from your credit card account or from your debit card.  This is where you give your credit or debit card details (card number, expiry date and security code) to allow a merchant or supplier to charge your credit card regularly to pay for the services they provide to you.

On which accounts can I set up regular payments?

Any transaction account, savings account, credit or debit card. For a transaction or savings account, you will nominate the bank account number you wish to use.  If that bank account has a debit card attached to it, you may choose to use the debit card number.

How do I cancel a direct debit on my bank account?

You can ask us to cancel your direct debit request and we will promptly do this. You can provide this request in writing, by phone or by coming into one of our branches. Once you have requested us to cancel your direct debit, you may also wish to contact the merchant to advise them that you are seeking to cancel your direct debit.

How do I cancel a recurring payment on my debit or credit card?

To cancel a recurring payment from your debit or credit card, you should contact the merchant at least 15 days before the next scheduled payment and keep a copy of the cancellation request. If the merchant does not act in accordance with your instructions you may be able to dispute the transaction using the form below.

EFTPOS/Visa Transaction Enquiry/Complaint

Is there an easy way to keep track of my direct debits and other regular payments?

Yes. We suggest you keep a record of any regular payments you have set up using your accounts or cards numbers. This form may help you do this.

Record of Regular Payments

What happens to my recurring payments when I get a new card?

You will need to notify each merchant of the new card number. This form may assist you.

Regular Payment Letter