Hello all,

This is part 2 to our 3 part series that may assist you in preparing yourself financially for 2016 and beyond!!

4) Draw up a budget – and try and stick to it
Now that you’ve identified those non-essential expenses, use the last 6 months’ credit card bills and transactions from your main bank account to draw up a budget. Add in any spending that you know about that isn’t covered in these two accounts.
From this, you should be able to identify how much you can save or by how much you can pay down your debt. If at the end of the next couple of pay cycles your bank balance or reduced credit card debt are pretty close to what you calculate they should be, then this should be good enough. If you’re way off, then:

5) Keep a financial diary
It’s hard to make a sensible financial plan when you don’t know what you’re spending. So keep a financial diary for a few months in which you record everything that you spend. You can do that in a notebook or a spreadsheet. Many apps and websites can help with this, too. You might be surprised at what you learn. Make sure that you include everything on your credit card bill, too.

6) Change the way you use your credit card
Going forward, only pay cash for bills that are under $10 – all your other budgeted items should be charged to your credit card on which you may earn points. You then re-cycle the points for items you would otherwise be paying for e.g. petrol cards NOT luxuries. If you haven’t budgeted for a flight to Sydney, don’t use your credit card points to buy one.
Calculate approximately how much cash you will need for each pay period plus any direct debits coming out of your bank account – leave this amount in your bank account.
If you are not settling your credit card account in full on the due date, deposit the rest of your salary straight onto your credit card – this immediately reduces the amount on which interest is charged.
Put all other new, budgeted purchases on your credit card on which no interest is charged until the bill is not paid in full.
As you are reducing the amount on which you are being charged interest, your interest bill will go down. If you are paying less interest and only spending for essentials, you will pay off your outstanding credit card bill much faster.
If you are settling your credit card in full on the due date, leave all your money in your savings account or off-set against your mortgage until the due day – then make sure you settle your credit card account so you are not charged interest.
The real secret though is – don’t spend money on items that aren’t in your budget.
This concept can be tricky to get a hold of without a demonstration, please feel free to pop into the office if you would like either Geoff or Tristan to give you a quick 5 minute demonstration.

Part 3 will be posted early next week – stay tuned!!


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