How to improve your financial fitness

22nd October 2020 - Freya Cormack

How to improve your financial fitness

Following a tumultuous few months, you may need to give your finances a transformation. In this article we’ll explain how to evaluate and reorganise your finances to become financially fit.

Assess your interest rate

With interest rates so low at the moment, it might be time to check up on your interest rate. Chances are, there will be a better one out there for you. Even a marginally lower interest rate can save you tens of thousands of dollars over the life of your loan, so don’t pay more than you need to. Don’t forget that you always have the option to switch loans.

Build an emergency fund

Life can throw you curveballs when you least expect it. By making an emergency fund, you are protecting yourself from these unpredictable moments. Every time you get paid, put aside a little bit of money and soon enough you’ll have a healthy emergency fund to access when needed.

If you put aside $100 from your fortnightly payslip, you’ll have saved $2,600 within a year. The next time you need car repairs or that dental procedure covered, you’ll be prepared. You can even set up an automatic fund transfer as often as you like with most banking apps. This way, you can watch your emergency fund grow before your eyes.

Streamline your finances by consolidating debt

When you consolidate your debt, you roll all debt into your home loan. This allows you to make just one monthly debt repayment. You can combine your personal loan, car loan and credit card debt under your home loan. Since home loans usually benefit from lower interest rates than these other debts, you can save significantly.

Debt consolidation can also help you manage your finances more effectively. You can avoid unwanted stress from accidentally missing repayments which can happen if you have multiple debt obligations.

In order to be eligible for a debt consolidation loan, it’s important to have a strong credit rating, stable employment and proof of making regular, timely home loan repayments.

Find out my rate today.

Look over your financial commitments

Most of us have some spending habits that we could change. Try to regularly assess your expenses and make sure that you are using any subscriptions and memberships. Don’t waste money on these things and make changes if necessary.

Set financial goals for yourself

Setting goals is a great way to improve your financial responsibility. Think about short, mid and long term goals you can set that are realistic and achievable. These could include:

  • Saving up for a specific amount e.g. saving $1000 every month for the next 6 months
  • Paying off credit card debt by a certain date
  • Start investing in the stock market

If you don’t know how to achieve your financial goals, it can be worthwhile to speak to a financial advisor. They can create a structured plan with you to help you reach your goals.

Living within your means

Just because you receive a pay rise, it doesn’t mean that you should also increase your lifestyle costs. By living within or below your means, you’ll have more money saved to help you reach your goals and avoid financial stress.

Try to avoid temptation and pressure from friends and family members to spend more than you are comfortable with. Check out the Australian Government’s Money Smart budget planner to start organising your finances today.

Review your rate in seconds

Do you know if you're getting the most competitive interest rate on your home loan? Find out how your bank stacks up here.

The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.

Rate my Bank is powered by Lendi and Lendi is the trading name of Lendi Pty Ltd (ACN 611 161 856, Credit Representative 518849), a related body corporate of Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence 442372). We will never sell your email address to any third party or send you nasty spam, promise.

*WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years. Fees and charges apply. All applications are subject to assessment and lender approval. Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.

^The estimated average future interest savings is calculated as at 15 April 2020 based on Lendi assisting customers into new loans with an average interest rate reduction of 0.89% for the 11 months prior, and assuming a median loan term of 26 years on both the old and new loan and all monthly principal and interest repayments will be made on time. Any future savings figures are estimated averages only, and do not take into account any product features or fees (including refinancing or break costs). Your savings will be different.