Being informed pays: How to fast-track your knowledge about money
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Staying informed about money matters is for over 55s. Right? Wrong.
Whether you're 54 or 21, it's vital for all.
While thinking about how to approach staying informed about money, scratching my head in between folding the laundry and yelling at the kids, I rifled back through our Kitchen Table research, then went and asked a few more women in my community how they stay informed about money. The answers are pretty consistent:
- "I ask my friends"
- "I ask my husband"
- "I talk to my dad"
- "I don't"
- I could count on one hand how many said, "I read money magazines every weekend"
Not one said they were a dedicated reader of the financial press. One or two had been along to a supposedly free "education seminar", and been very much underwhelmed by being flogged a financial product for their efforts. One particularly grumpy individual was trying to exit the arrangement she'd been pressured into at one such event. I can't say I blame her either.
Free seminars are a real bugbear of mine. Unless you can clearly see how you're paying for the so-called "expertise" on offer, then skip the free seminar. If you accept there will be a product flog, then go in eyes wide open. For example my bank does an occasional education session for women which is actually really good; I know I pay for it with my fees and that they'll try to upsell me to their other services but I'm ok with that. It's your decision what's right for you, but caveat emptor if it's "free".
If staying informed in its broadest sense is just too hard and you'd rather do something, anything, else, do at least follow these six pointers, after all it's your own risk if you keep your head in the sand. It's your money so who knows, you might even find it interesting after all:
- The interest rate on your mortgage, is it competitive? Check on your online banking portal's summary screen for the current rate and crosscheck with one of the rate comparison sites for a benchmark. Google 'home loan rate comparison' and a few different ones will come up.
- What's the real cost of your new boots, if you only pay the minimum balance on your credit card post purchase? Check your statement, the cost breakdown will be shown there now after the rules were changed recently requiring issuers to be more transparent.
- What are your current bank balance and your month end forecast? Keep a spread sheet or at least a written notebook of your monthly expenses so you know what's coming up and whether you need to keep some back for the power bill rather than blowing it on another new pair of boots.
- A rise in interest rates or rent will affect your ability to afford your basic essentials. Do you know how much cash you need to live and what things could be cut back on in a heartbeat if needed? It goes with having 3) above in line
- Free money! Are you optimising your tax? For example, according to the ATO, "If you are a low or middle-income earner, you can take advantage of the super co-contribution payment by making eligible personal super contributions to your super fund or retirement savings account (RSA). The government will then match up to $1,000 of your personal super contributions." Check here for more information. Sounds like free money to me, why wouldn't you if you qualify and can raise the $1000?
- Can you stretch to paying an extra $100 into your mortgage per month? According to the NAB online calculator, for every $100,000 of loan outstanding, dropping an extra $100/month into your loan account will save you $16,788.13 in interest and pay off your loan four years and one month earlier. (assumes a rate of 6% on a 20 year loan). Figure out your own numbers by checking out your bank's calculators.
Being a fan of refuting the commonly accepted "norm", which suggests we don't want to stay informed about money matters, I'll close by asking you:
- How do you stay informed?
- Where do you go,
- Who do you ask?
- If you don't stay informed, what are your reasons?
Seeing as how we are creating the Women's Agenda right here, what do you want to know more about when it comes to financial literacy? We'd love to know.