Five ways to increase your savings, decrease your debt and be financially happy
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Women and men share some different attitudes and behaviours when it comes to debt and savings. According to the results of a recent survey by RaboDirect, it wouldn't be a stretch to say women are more "responsible" when it comes to tightening the purse strings.
The May 2012 survey of 2355 financial decisions-makers between aged between 18 and 65 found that although women are less comfortable with their finances, we're more like to be taking control of the situation, to budget accordingly and to save for retirement.
The survey found 81% of us know how much we have in our savings account, compared to 75% of men, while 92% of us believe we need to be saving for retirement compared to 85% of men.
But plenty of women still report that dealing with money is stressful (42% compared to 35% of men) and just 46% of us say we're confident with our finances.
RaboDirect spokeswoman Renee Amor says the below strategies can help.
- Budget, budget, budget. Spend less than you earn. Simple right? It can be by going back to basics and developing a proper budget. "Knowing how much is coming in and how much is going out gives you a visible benchmark that clearly indicates how much you should put aside as your savings," says Amor. "It will also show you what you can afford to spend. It doesn't need to be very complex but writing your budget down can really help you save a lot of money."
- Pay off your most expensive, non-deductible debt first. Home loans, car loans, school fees and credit card debt need your attention before the saving can begin, and it helps to make weekly or fortnightly payments rather than monthly. Amor recommends sticking to the one credit card to avoid paying multiple annual fees, and where possible switching the credit card for a debit card.
- Take advantage of great rates. Term deposits offer strong returns on your cash, and allow you to maximize and safeguard your investment. "Because you can opt to take your interest monthly, quarterly or half yearly, locking your funds away on a secure term still allows you access to the interest," says Amor. "You can also stagger maturity dates to offer continuing access to funds, known as 'laddering', or target a single maturity date with a range of different term deposits, known as 'bullets', depending on your savings or investment goal."
- Know a true high interest savings account versus an everyday transaction account. Don't put your savings in the wrong account. Amor recommends having your salary paid directly into a high interest savings account rather than leaving money idle in a low-interest one. She believes plenty of us are being misled by the term 'savings' on the name of our accounts, meaning our money's earning either zero or very-low-interest, but being used to pay high fees.
- Seek financial assistance. A qualified financial planner can help you get your finances in order, reduce the risk of getting stuck in a stressful financial situation, and increase your ability to maximise your earnings. "There are dozens of great tools available on the internet that can offer advice and helpful tips such as the Australian government's Understanding Money website. If you are looking for a qualified professional the Financial Planning Association's 'find a planner' tool is very useful"