Following on from last week’s blog, we wanted to talk more about ways you can save; and we don’t just mean money, we mean saving time and energy stressing over many things that need not be so complicated!
It all comes down to the 3 C’s that is Chances, Choices and Changes!
Let’s firstly take a realistic look at interest rates and the ‘chances’ of them changing dramatically…
- Many factors influence whether rates rise or fall, the Reserve Bank of Australia are all about creating steady inflation and a strong economy; and so any changes to interest rates that could have a negative impact on their primary objective would not be conducive to the outcome they are working to achieve.
- On top of this there are professional regulating bodies, legal Acts and administers of law that work together to protect borrowers from lenders operating outside the rules.
- And finally, all Lenders need to remain competitive to stay in business; offering a product that is unsuitable or unaffordable isn’t going to attract customers or help them grow.
Makes sense, right? If so you can now put a tick in understanding the ‘chances’…So let’s take a further look at ‘choices’ here is how you can choose to prepare…
- Keep money in an offset account – it works to reduce interest and serves as a backup fund
- Consider a fixed rate – many lenders are offering great fixed rates as low as 3.69% at the moment
- Work out your affordability based on a higher rate – note that most banks will assess your repayments as if rates increased as high as 7.25% so they are already making a save calculation
- Have a fall-back plan that doesn’t involve selling – i.e. rent out your home, move in with family or look at ways you could increase your work hours/income temporarily…
Self Employed? Plan now!
- Put extra funds aside when business is thriving – so that during slower times you still have a steady source of income
- Or…if you have a high-income year – consider paying ‘interest in advance’
- Look at income protection – at Peasy we insist clients attend a free consultation to understand their options
Starting a family? This is where timing comes in…
- Reduce unnecessary spending and start saving up to a year prior – this gives you time to practice and reinforce better spending habits
- Factor into your new budget additional expenses that will come with having a child – such as less income or childcare costs
And Lastly, try implementing some small but consistent ‘changes’ to your lifestyle now to see if you can live with less:
- Suggest less expensive ways to catch up with friends – a coffee catch up instead of dinner or a walk along the beach
- Withdraw cash instead of taking your credit-card out every single day!
- Sell items online that you don’t use any more – facebook, gumtree and eBay are easy to use
- Reduce bad habits like ‘smoking’ or try having an extra ‘alcohol free’ night per week
- Cancel pointless direct debits, subscriptions, memberships that you never use… we all have at least one!
- Swap utility or account/membership providers for someone cheaper
- Research cutting costs online – there are plenty of lifestyle blogs that will give you more ideas
- Use cheaper forms of transport when and where possible – uber, bike, bus or train
- Transfer savings to an account you can only access through the branch, much harder to dip in!
We hope we have reassured you that there are many ways you can plan and prepare for change, just by making a commitment to understand the chances, make good choices and implement some changes can only lead you towards a more secure financial future.
Any questions you have on this topic or if you want to discuss your personal situation further then please get in touch today.
Remember the greatest risk of all is to do nothing at all!