Some Aussies are flocking to hardware stores so they can spend their social isolation doing some home improvements. As fun as that sounds, if you have some time on your hands during the COVID-19 crisis, why not also get your finances sorted?
Here are a few things you could do that you may have been putting off:
1. Get your accounts in order
It’s very important that you know exactly what accounts you have so you can keep track of all your money. For example, do you have any old bank accounts open from before you were married or before you took out a mortgage? Do you still have credit cards you applied for in the past just to get the bonus frequent flyer points?
Having an open account or credit card that you never use – or check on – leaves you more vulnerable to identity theft or scam charges. You could also be unknowingly racking up credit from automatic debits you’ve forgotten about. This has the potential to affect your credit rating.
One way to organise your accounts could be to have:
- a mortgage and bills account
- a living expenses account
- a savings account for large purchases such as a holiday
- a back-up savings account for financial emergencies that you otherwise don’t touch
- one or two credit cards maximum. If you have two, make sure they are from different providers. This gives you flexibility in payments and helps you take advantage of rewards.
2. Consolidate your super funds
It’s easy to lose track of old super funds, particularly if you have had a few short-lived jobs over your career. The ATO website can guide you through the process of recovering this money – remember, it’s your money!
3. Make sure you have an updated will
If you die without leaving a will, your assets will be divided according to the law – and this may not be what you want. If you already have a will, make sure it is up to date to include your latest circumstances (such as marriage, divorce, children etc). Ideally you should actually have a full estate plan, which also includes superannuation-binding nominations, a testamentary trust and an advance healthcare directive (such as powers of attorney, guardianship and so on). Chat with your family or loved ones about your wishes – and theirs.
4. Make a budget
Uncertain times mean you’ll want to keep a much closer eye on your finances, so a budget is essential. Take a look at your expenses over the past month and work out where you are spending unnecessarily. Are there subscriptions or memberships you aren’t using, for example? Find a budgeting and expense tracker app that works for you and link it to your online banking system – this makes it very easy to keep a tighter rein on your spending going forward.
5. Minimise your expenses
Take a look at your service providers – such as energy, insurance (including health, car, home and contents) and telecommunications – to see if you can get a better deal. You may find your current plan is no longer competitive. You can use comparison websites to help you find ways to save.
You may also be able to save by reassessing the level of service you are currently paying for. For example, you could consider downgrading your hospital and extras cover on your health insurance, particularly since many of the benefits they provide are temporarily redundant due to closures.
6. Consolidate your debts
Consolidating multiple loans into one loan could save you money as well as administrative stress. Having one repayment per month to just one lender is much more convenient, makes budgeting easier and could help you save on loan fees and charges.