If you truly understand your financial situation you should be able to answer yes, with confidence, to each of the following questions. If you can't, it's high time you got on top of things.
1. Do you know how much you spend each month?
This is critical. If you don’t know how much you’re spending each month on things like rent, bills, food and entertainment, you won’t know whether you’re living within your means. Worse, you won’t know how much you could potentially be saving. The solution? Make a budget – it’s the first step to getting on top of your finances.
2. Do you know how you would pay for a significant, unexpected cost?
Your financial situation can change in the flash of an eye. Indeed, in 2014, over 42% of Australians had a higher than expected household bill and 40% had unexpected car repairs and were forced to use their savings or credit card to pay it off. You’re better off having a plan – whether it be an emergency fund, insurance, or a sound budget with a buffer for unexpected costs.
3. Do you know where ALL your super is and how much you have?
If you do, you should pat yourself on the back. If you don’t, you’re not alone. According to the Australian Taxation Office (ATO), a massive $11.7 billion is sitting in lost superannuation accounts which have an average balance of $10,000. If you don’t know where your super is, it’s time to check.
According to the Australian Taxation Office (ATO), a massive $11.7 billion is sitting in lost superannuation accounts which have an average balance of $10,000.
4. Do you pay off your credit card each month?
Good habits are a great thing. If you’re not paying your credit debt off each month you could potentially be paying thousands in extra interest and hefty late fees, not to mention the risk of getting a bad credit rating. Switching to regular payments is a change you can easily make, and you’ll be the richer for it.
Do you know how much insurance you would receive if your home was destroyed, if you became permanently disabled or couldn’t work?
Even if you think you know the answer to this, you may be wrong. According to the Insurance Council of Australia (ICA), more than 80% of Australians are underinsured, meaning that while they have insurance, they haven’t insured their items for the correct value. So if something happens, you’ll still need to fork out cash. To avoid being underinsured, check your policy and talk regularly to your insurer to see how much they will currently pay and under what circumstances.
If you haven’t got insurance, it’s a no-brainer– you need to get some.
Yikes, I know less than I thought!
We aren’t all born to be financial planners. In fact, most of us would do literally anything else than have to think about our finances.
However, if you answered ‘no’ to any of the questions above, you are playing a dangerous game with your money. The good news is you’re not alone. With the support of your employer and our free resources, Bees with Honey can help you get your finances on track.