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The more you earn, the more you spend. Does this ring true for you?
In the busy lives we lead, it is easy for us to focus on increasing our income without really thinking about the expenditure side of the equation.
In today’s world of soaring costs, dedicating just one day each year to reviewing your finances could save you thousands of dollars. Intrigued? Let’s dive into how you can make this annual financial review (I like to call this a Financial Wellbeing Day) both fun and fruitful, whether you’re a professional juggling a demanding schedule or a seasoned saver navigating today’s high cost of living.
Step 1: Beverage and bills
Grab a comfortable spot, your favourite beverage, and log into your online accounts to gather your bills and statements.
Let’s start with the big hitters: gas and electricity bills. Switching providers can save you hundreds annually. For instance, if your annual gas and electricity bill is $4,000, a 10% reduction saves you $400 a year. This simple action, using online comparison tools, can be done in minutes. A pro tip here is to look beyond the headline discount figures and check the actual rates for your gas and electricity.
Step 2: Take charge of insurance
Don’t let insurance premiums drain your resources. Bundling car and home insurance could save you up to 15%. If your car insurance costs $1,500 annually and home insurance $2,000, bundling, or switching providers could save you around $525.
Again, there are plenty of online comparison tools which allow you to easily look up the costs for different providers.
Step 3: Home sweet home (mortgage rates)
Speaking to your trusted finance professional to refinance your mortgage (or even simply calling up your bank and asking for a better rate – yes, I’ve done it and it works), can lead to substantial savings. Many mortgages have had fixed rate periods end and we are seeing new standard rates in the 8% plus range on some of these mortgages. As an example, a 2% reduction on an average $600,000 mortgage would save you $12,000 in interest. Even if you think you have a pretty good rate, a simple 0.5% reduction would still save you $3,000.
Step 4: Dialling in mobile and internet plans
In the world of connectivity, mobile and internet plans are essential but often overlooked expenses. Reviewing and switching to more cost-effective plans can yield some great savings. If your combined mobile and internet bills are $2,400 annually, finding a plan that offers similar services for 20% less can save you $480 a year.
Step 5: Subscription spring clean
Now, let’s tackle those subscriptions. Many people unknowingly accumulate multiple subscriptions, from streaming services to online magazines, exercise and other subscriptions. Reviewing this and cancelling (or pausing) the ones you no longer use can save you a significant amount. If you spend $50 a month on unused subscriptions, cancelling them can save you $600 a year.
Step 6: Crunch the numbers and celebrate your wins
Add up your potential savings:
- $400 (gas and electricity)
- $525 (car and home insurance)
- $3,000 (home loan interest)
- $480 (mobile and internet)
- $600 (unused subscriptions)
You’ve done it! A whopping $5,005 yearly saving for a day’s work – not a bad return. Pat yourself on the back and celebrate your newfound financial prowess. These savings can help fund your next vacation, bolster your cash reserves, or accelerate your wealth creation goals.
There are many aspects of your financial world that can be reviewed and optimised and the above is just an example of this. Although the savings may seem small in isolation, adding these up amounts to some significant savings.
Financial Wellbeing Day – make it your day.
Taking a Financial Wellbeing Day each year to review your finances isn’t just about saving money – it’s about taking control of your financial future in the face of today’s high cost of living.
A Financial Wellbeing Day can extend beyond your finances too. All too often in our busy lives we forget to spend the time to focus on things like our mental health, physical health checkups, relationships, personal development, giving back to our community etc. Whatever it is for you, taking that full day to focus solely on these aspects of your life, can absolutely be liberating and in this particular case, financially rewarding too.
So, what are you waiting for? Schedule your personal Financial Wellbeing Day now. Your future self will thank you!
The Money & Life website is operated by the Financial Advice Association (FAAA). The views expressed in this article are those of the author and not those of the FAAA. The FAAA does not endorse or otherwise assume responsibility for any financial product advice which may be contained in the article. Nor does it endorse or assume responsibility for the information
