Four financial resolutions that won’t cost you a cent but could save you a pretty penny.

• Know thy interest rates…. seek better ones if possible.
• Know thy spending….do you need to buy three coffees a day?
• Know thy superannuation…. how is your super invested and what are your options?
• Know thy insurance…. compare how much you have, to how much you need.

Resolution Time.

By this time of the year we've made our New Year’s Resolutions. I’ll do more of this…and I’ll do less of that… and so on. Some stick, most don’t. What sounds great on the third day in January is often well forgotten by the second day in March.

Financial resolutions fall in this basket. 

It might have something to do with the nature of resolutions themselves. If they're too hard or going to take too much effort they’re easily forgotten…until the following January when they pop up again. But what if the resolutions didn’t sound like a laundry list, weren’t that hard to do, and didn’t cost you a cent but could save or make you a pretty penny. Would it be worth the hour or so of your time?

Let’s run through four simple financial resolutions anybody should be able to master. 

But let’s make it simpler. Instead of trying to do everything in a week (which by the way would be a great way to start the year), why don’t we aim for one resolution per quarter? With a timeline like that we have no excuses. Even the laziest of us should be able to manage one of these resolutions every three months.

This time let’s make some resolutions and stick to them. 

1. Compare any of your interest rates to other rates available. 

Interest rates were in the news a lot last year. This year doesn’t look like it is going to be any different. Make 2024 the year you get on top of your interest rates.

• Home Loan - Rates have been changing so much lately you’re forgiven for not knowing your current interest rate. Why don’t you take the time to log in to your bank account, and know exactly what rate you are paying. Once done, compare this to other rates are out there. Speak to a mortgage broker, they can tell you what the best deals. Go back to your lender and see if they can give you a better deal. If not, some lenders were offering cash incentives if you refinanced last year, see if they apply to yourself. 

• Credit Cards – Most of us have a credit card. Most of us wouldn’t know what rate we’re paying off the top of our head. Find out what rate you are paying, then google credit card comparison. If you are on the typical card charging 21% you might be surprised that low-rate cards exist with a rate closer to 12%. Do a balance transfer and cut up the old card. Don’t forget to swap any recurring direct debits.   

• Term Deposits – If you have cash kicking around in a term deposit that you haven’t done anything with in a while, then take the time to seek out some alternatives. Is staying loyal costing you money? 

2. Take a snapshot of your spending

For some of us, confronting our spending habits is going to be an issue. We might be scared of what we might find - but I think it needs to be done every now and then and is probably one of the best things we can do. 

Most of us don’t use cash anymore. Meaning all our spending is done through one of our cards. Which also means our spending has never been easier to track.  Just for the hell of it, go through your card statements over the last three or six months to get an idea of your spending habits. 

Having a handle on where you are spending your cash will give you an indication of where you can make some changes. Regardless of what you find - if you know what you're spending your money on, you can come up with ways to reduce the costs.

For an easy win: Check your utility bill and see if you are on the best plan available to you. By law energy companies in Victoria must tell you on your bill if you could save money on a cheaper plan. To make it easier there are websites that help you compare different energy provider plans. Easy savings could be there for the taking. 

(Personal Note. I learned this the hard way. For years I neglected a utility bill because it was on a direct debit. When I finally took the time to have a look, I was shocked by how expensive my plan was compared to what was available. I felt like a complete idiot. I switched over immediately)

Examining your spending and then making changes could open up hundreds of dollars per month.  This extra cash could be put towards something you like, maybe a holiday. Or better still towards any debt you might have or a savings plan into an Exchange Traded Funds.

Either way you won’t know if you can cut your costs if you don’t take the time to review your spending.

It’s easy to do and will only take an hour or so tops. If you don’t, you only have yourself to blame. 

3. Actually look at your superannuation statement.

When most of us receive our superannuation statements, we have a quick look at them and then put them in the drawer or throw them away. I’ve lost track of how many people I’ve met who had no idea how their superannuation was invested.

This is surprising because it is often a tidy amount. The whole “I cant touch it until I retire idea” means we pay it scant regard. I can assure you, if you had the same amount in sitting in your bank account you would take a lot more interest in it.

Take the time at some stage this year to:

• Read your statement and find out how you are invested. Are you conservatively invested or more aggressively invested? 

• Ascertain whether this is the place you want to be invested. If you are young and can take fluctuations, a growth fund may be more your style. If the market movements cause you anguish, you may want to adopt a more cautious approach.

• Understand the fees you are paying. Most funds are reasonably priced but there are differences. Compare your options.

4. Insurances. Know how much insurance you have and compare it to how much you need.

Insurance is the only product we buy that we never want to use. Insurance doesn’t give us a tangible benefit. The only thing it gives us is peace of mind. Peace of mind that if things go pear shaped we might get out of it without too much damage. That’s it.

We start our adult life with little need for insurance, but the older we get and the more commitments we take on, the more insurance we need. If you have a family, you need life insurance. If you have debts or a lifestyle to support, you need income protection. Australians are lucky in that these insurances are available within superannuation.

The thing I like to ask clients when discussing insurance is “what situation do you want to leave behind?”. 

If talking life insurance, the question to ask yourself is “if I died now, what situation do I want to leave for my family”. 

Do I want them to struggle or do I want them to be ok? How are they going to be ok? If you have a mortgage, the obvious answer is enough life insurance to pay off the debt. If the kids are really young you might want extra insurance so you partner doesn’t have to go to work full time straight away. If your dream is to send the kids to private school, you need more to cover off on the school fees. And so on.

Work out what these amounts are and compare it to how much insurance you have in place already.

Don’t stop at Life Insurance, do the same process with Total and Permanent Disability Insurance and Income Protection. 

New Year. Fresh Start.

What I really love about the new year is the fresh start. It is the perfect time to reflect on where you have been, take note of where you are and chart the course for where you want to be.

If you would like to discuss any of the ideas raised within this blog I can be reached at andrew@endgameadvice.com.au

This blog’s aim is to provide general information only. It should not be relied upon as personal financial advice. While all care was taken at the time of writing I make no representations as to the accuracy, completeness, suitability, or validity, of any information contained within. Endgame Advice strongly recommends investors consult a financial adviser prior to making any investment decision.