Money Tips 31 to 40 Explained (#MoneyTips)

Time for my fourth set of 10 money tips to gain an explanation. I have posted my money tips to Twitter (using the hash tag #MoneyTips) and found that some of them were very hard to keep within that magic but annoying 140 character limit. So far I have managed it, however sometimes a little of the meaning seems to get lost, and occasionally I wanted to add a little more explanation. This is where I do it.

I hope you enjoy the next 10 tips below – and remember to tweet @RememberToWater with hashtag #MoneyTips if you have any of your own tips you want to share with the world.

Money Tips 31 to 40:

More tips. No real order. But now with twice the flavour! As always these, along with past and some future ones, are all listed on the Money Tips Explained page if you are after more.

31. Save first, spend later. People spend whats available, so limit that amount.
    • Uni students manage to live off peanuts because it’s all they have available. If you commit to putting 5% of your pay into a savings account each month (and don’t touch it), your lifestyle will adapt. Slowly increase that figure until it hurts and then back off a little (you do need to live your life). As a general rule I would try to aim for at least 10% to 20%.
32. Save 100% of your next pay rise for 3+ months before changing your lifestyle.
    • We have all seen stories of people on high incomes that can’t make ends meet. I am not sure I agree with “the Globe’s financial advice remains the same: work more”. In my mind the reason for this is simple – spending too much. In our consumerist society there is always something new you can spend you money on. So rather than jumping on the band waggon try saving your pay rise and not increasing your standard/cost of living. Try to save it for (at least) three months. Not spending a pay rise is probably the easiest and least painful way to save a nest egg or start an emergency fund.
33. Find a cause you care about & give 10% of your income. You appreciate the rest.
    • This tip can be polarising, but giving is something I care about. I aim to give 20% to 25% of my after tax income to various good causes. Just like with saving I recommend aiming for around 10%. Knowing where the money is going and that it is actually making a difference to people’s lives is an important part of this. Giving doesn’t just have to be about money, if you don’t like the idea of giving money,m time and goods are two other common methods.
34. Your partner is your biggest asset & liability, agree on financial goals.
    • With two people you can achieve your financial goals twice as fast or more. You probably have two incomes, but don’t have two times the living expenses (of course the opposite is true – you can also get into debt twice as fast). The problems come where one person is trying to save/invest as wisely as they can and the other is enjoying spending the hard-earned money. If you can get on the same page (that may mean compromising in both directions) then it will not only help your relationship, but also your finances as you will be working together.
35. If you don’t like finance get a fee for service financial planner to help.
    • Not everyone likes finances, or more specifically managing finances. If you have made it to this tip then you probably do, but I am sure you have friends or relatives who don’t. I like the idea of those people using a fee for service financial planner. The main reason is that if you are paying the fee you have a better chance of the advisor working for you. However if the advisor gets commission from products (such as insurance) that they sell you, who are they really working for? MoneySmart has some nice simple starting guides around financial advice, choosing an advisor, and the costs associated with it.
36. Limit your lifestyle increase to 50% of your next pay rise. Save the rest.
    • Similar to tip 32, this is about not spending pay rises. However this one is intended to focus on longer term saving (or investing). After you have saved the pay rise for 3+ months you may want or need to increase your spending. After all, the cost of living keeps going up. If you do, limit it to 50% of the pay rise and save or invest the rest. The first 50% will help to ease any overly stressing or problematic financial burdens, whereas the second 50% will help to make sure those burdens don’t come back in the future.
37. Pay off high interest debt first, but don’t miss other payments to do that.
    • Even if a debt is small, a high interest percentage will hurt you more in the long run. When you are saving, you want a bank account that has the highest interest possible to make as much money as you can. This is you loaning the bank money. When the bank loans you money, they also want to make the interest rate as high as they can (without you moving to another bank). The higher the interest rate the more the bank is making off that loan (and others like it). Typically this means you should pay off credit cards first, then personal loans, then car loans, and finally a mortgage.
38. Pay off small debt first. It will give you a sense of accomplishment.
    • If you have been paying off debts for what seems like ages, it can often start to feel like there is no end in sight. So, while paying off higher interest rate debt first is the ideal choice, sometimes motivation can be more beneficial than saving a few extra dollars. If you only have a small amount left on a lower interest personal loan, but a long way to go on your high interest credit card debt, the morale boost you can get from wiping out a debt completely can be worth it. The worst thing you can do is give up. So if you worried you may give up, pay off the small debt, have a (small) celebration, and get some renewed vigour to attack that debt again.
39. Pay your bills annually if it gives you a discount.
    • One of the best things about having an emergency account is that you can use it to pay larger bills annually. This often comes with a discount. Car registration is an example. The cost of 12 months is less than double 6 months. So if you are planning on keeping the car for over 6 months (which most people do) you will save money by paying the 12 months. It’s not rocket science, but you need the cash up front. This is a perfect reason to dip into that emergency account – as long as you remember to top it back up again.
40. Look online for any lost Superannuation accounts you may have.
    • If you are keeping track of your money then hopefully you won’t have lost any of it. However many of us had jobs when we were younger and not thinking about super. So head on over to the ATO lost super website (or just log straight into the myGov site) to check if you have any super in your name sitting unclaimed. You can then roll it over into your existing super account and potentially avoid an additional set of fees.

So I lied a little bit. Can you tell that money tips #37, #38 and #39 were not just in a random order. I had always been a “pay off high interest debt first” type of person. However I met someone a few of years after the GFC, who said that the best thing they ever did was keeping their motivation up. To do that they not only focused on the higher interest debt, but also on getting rid of one entire debt at semi-regular intervals. In the end I think we worked out it would have cost them another couple of thousand dollars. However if they have not kept the momentum up for even 1 year it would easily have cost them at least 10 times more than that.

Do you have any good debt repayment stories (or other money tips) to share?