MANY Australians hoping to get financially fitter in 2014 and fatten their fortunes will need to tighten their spending and give themselves a budget makeover.
Many New Year’s resolutions have already been broken but experts say it’s not too late to reassess your finances and ensure that the budget sheets are balanced.
Interest rates have remained at historically low levels and are expected to remain so for much of this year which is good news for borrowers, but no good for savers.
Adelaide couple Chris Cameron and Isobel Rosser, 24, holidaying in Melbourne said their goal in 2014 was to scale back their spending at restaurants and on takeaway and save for their first home.
“We spend about $600 to $700 a week on eating out, we had a $523 dinner last night at Rockpool ,” Mr Cameron said.
“We want to try and buy a house this year so we are going to have to cut back on eating out.”
Some of the nation’s leading experts have revealed their best pieces of advice to help you get your finances in tiptop shape this year.
Financial comparison website’s Mozo’s spokeswoman, Kirsty Lamont, said avoiding unnecessary fees should be a top priority for banking customers in the new year.
“Last year the average Australian household paid more than $100 in banking fees and if you are regularly paying things such as foreign ATM fees it can add up to a lot more than that,” she said.
“I don’t think there’s any reason anyone should be paying banking fees, there’s a lot of fee-free accounts out there.”
Online savers and term deposits have also taken a hit by falling interest rates and Ms Lamont said savers should check the interest rate on their account and make sure they are getting a good deal.
“The first thing is to ask yourself whether you know what rate you are earning,” she said.
“There are many savers out there who are not earning enough interest to beat inflation, check the ongoing rate and if it’s anything less than three per cent it’s not enough to get ahead of inflation after tax.”
Latest figures showed the nation owed a massive $48.9 billion on plastic and about $34.1 billion was accruing interest.
Ms Lamont said the interest rates on credit cards was far too high and many Australians needed to look elsewhere to get a better deal.
“The average credit card interest rate is still above 17 per cent so credit card debt is still an incredibly expensive form of debt,” she said.
“Half of all the cards on the market still have rates over 18 per cent so if you have one of those cards and you are paying interest you are basically throwing money down the drain.
“Make a commitment to stop lining the banks’ pockets in 2014 and get rid of your debt once and for all, the best way to do that is get a zero per cent balance-transfer card with honeymoon interest rate periods.”
She also suggested sitting down and working out a budget on how much debt you can pay back each month.
Interest rates on home loans remained at historically low levels in 2013 and Australians have continued to leap further ahead on their mortgage repayments.
The Mortgage and Finance Association of Australia’s chief executive, Phil Naylor, encouraged Australians to continue these habits and slash their mortgage debt.
“The way to save money on mortgages is to either pay more off each month than the bank requires you to or if your loan allows it to pay more frequently,” he said.
“Many loans now you can have fortnightly repayments instead of monthly repayments which ultimately reduces the interest bill and you pay off the principal quicker.”
He said Australians should review their mortgage including the interest rates and fees and charges that apply to ensure it was still competitive.
Returns on nest eggs in 2013 were above 15 per cent for the median growth funds, but the Association of Superannuation Funds of Australia’s chief executive Pauline Vamos said there was a couple of key things people should do to keep their retirement savings in good health.
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“The first step is to find out if you have any lost super,” she said.
“Currently there are billions of dollars in lost and unclaimed super, and chances are that some of it belongs to you.
“Use the Australian Taxation’s Office’s SuperSeeker tool to search for your lost and unclaimed super.”
She also said people should try and contribute more to their superannuation so they are left better off when they do eventually retire.
For many investors it’s a choice between shares and property.
Financial expert Noel Whittaker said Australians looking to boost their wealth needed to do a few key things.
“Write down your assets – diversification is the key but the bulk of Australians are overweight to residential real estate and underweight to shares,” he said.
“If you are overweight to residential real estate you should adjust the asset mix in superannuation to give a greater emphasis on share based investments.
“Every year, you should also write down your net worth to see how it is going when compared to your goals.
“If it has been a bad year you may need to increase the amount you invest in the following year to catch up.”
Disclaimer: This editorial provides general information only. Before making any financial or investment decisions, we recommend you consult a financial planner to take into account your particularly investment objectives, financial situation and individual needs. Charter Financial Planning and its authorised representatives do not accept any liability for any errors or omissions of information supplied in this editorial. Charter Financial Planning Limited ABN 35 002 976 294 AFSL Licence No. 234665. Principal Address 750 Collins Street GPO Box 2830AA Melbourne VIC 3000.