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What if you’re not saving any money, not saving enough or unexpected events throw your finances into disarray? Budgeting and being prepared for unexpected events can change things for the better, often without too much pain.
Budgeting: what you need, and what you want The best tool for finding extra money is a budget, much like Nat and Sam’s record of income and expenses. Look at the things you need – the essentials, such as housing and food – and those you simply like to have, or want. When you need to trim the budget, cut back on the ‘wants’ first – things that aren’t essential for everyday life. Don’t cut out all the wants, because if your budget’s too tight, it’s not going to work.

How can you save more?
The best way to save is to put money away as soon as you are paid and before you spend.

What you can do: Have an easy access cash account for everyday needs, with a debit card attached Potential savings: Reduces need to use credit card; earns interest How it could work: Get your pay deposited into this account
What you can do: Save or invest a fixed amount of money every pay in a separate account Potential savings: More for your future goals, and an emergency source of money How it could work: Get your employer to pay direct to
your account or have a fund manager direct debit your bank account What you can do: Save your pay rises, bonuses, special payments or tax refund Potential savings: Savings build up significantly over time as you continue to live within your existing budget How it could work: Increase your automatic savings amount. Immediately invest your extra money

What you can do: Pay your mortgage fortnightly, and pay an extra 5–10% on your mortgage every month Potential savings: Saves interest costs and pays off your mortgage sooner How it could work: Get your lender to deduct your
mortgage and extra payments fortnightly What you can do: Budget a specific amount for fun, leisure and personal expenses Potential savings: Controls impulse buying How it could work: Makes it easier to stick to your budget
What you can do: Put your change into a savings jar at the end of each day Potential savings: Creates a little pot of ready cash How it could work: Use this money for small personal expenses What you can do: Make extra superannuation contributions from your pre-tax salary (‘salary sacrifice’) Potential savings: More money for retirement and less personal income tax paid How it could work: Discuss with your pay office, but make sure that you can afford to make extra contributions

Pay by cash or EFTPOS instead of using credit Potential savings: Encourages saving because you use your own money (which is limited) instead of borrowing it. Saves interest on credit cards Pay credit cards off in full each month
Potential savings: Saves 16% per year on your outstanding balance Use lay-by for Christmas shopping or save small amounts over the year Potential savings: $25 per week would mean $1,300 in Christmas cash, avoiding high credit card bills in the New Year and interest payments Combine multiple accounts, such as cheque and savings accounts at the bank, and separate superannuation funds Potential savings: Saves fees and charges Use internet or phone anking Potential savings: May save bank fees Take your own lunch to work Potential savings: If you save $4 per day, that’s $1,000 a year

Save for your next car and choose a lower-priced model Potential savings: A big deposit reduces the total purchase price, and you may also get savings on borrowing and insurance costs Use pre-paid cards for your children’s mobile phones Potential savings: Make your kids top up the card themselves if they spend too fast Use self-catering holiday accommodation Potential savings: Saves on eating out at cafes, hotels and restaurants

What if you can’t pay your bills?
Stay calm and work out what you can reasonably pay each person to whom you owe money (your creditors), considering both your living costs, rent or mortgage, and all your debts. Not-for-profit financial counsellors can help you. Contact your creditors promptly and tell them you are having financial difficulties and want to discuss repayment arrangements. This is especially important if creditors hold security over your home, car or other assets. Offer only what you can reasonably afford to pay, and offer something to each creditor. Try to cover interest or charges applying to the debt.

Ask if the creditor will agree to reduce the interest on the debt until you can get back on your feet. Confirm any agreement in writing. What if you get retrenched? Before making any decisions, taking any money or signing any documents, find out your entitlements and the best way for you to deal with any money you may receive. You may not be able to undo a decision you are unhappy about. Ask someone who understands your terms of employment and your superannuation benefits, how much tax you’ll pay and what makes the best sense for you financially. If you belong to a union, they may be able to give you free advice.

What if you get a windfall?
Above all, go back to your personal goals. Consider paying off all personal debts first and then your home mortgage.If there’s still money left over, consider making a personal contribution to superannuation, a contribution to your spouse’s superannuation or starting to invest. Windfalls can easily disappear through unplanned spending or hasty investments. For large sums of money, you may need the help of a financial adviser.

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