In these ever-changing and uncertain times, there has never been a greater emphasis on our health and wellbeing.
However, there is a crucial element that is often overlooked – our financial wellbeing. When addressing our overall health, it is essential to look at the responsibilities and stressors that come with managing our finances.
According to the Organisation for Economic Co-operation and Development (OECD), the average Australian household is in debt around of 211% of their net disposable income, ranking us fifth worldwide behind countries such as Denmark and Norway. In this debt race, the further away from first place we come, the better!
With little education around budgeting and responsible spending, especially among young adults, it can be easy to fall into an unhealthy financial position. But there are a range of basic strategies you can implement that may help you to keep on top of your finances, all while positively contributing to your own health and wellbeing.
First up, it’s important to know where your hard-earned cash is going. Spending $30 per week on coffee? It’s easy to blur the lines between needs and wants, so creating a structured budget to implement weekly is a great place to start.
The 50/30/20 budgeting method could be a useful tool to use. It assigns half of your earnings to needs, such as rent, food and bills, another 30% towards wants and leisure (an occasional latte from your favourite café) and leaves the remaining 20% to be distributed between debt repayments and savings.
Another creative way to manage your debt is to map out your financial liabilities into a hierarchy or pyramid. Jot down your current debts and place those with the highest interest rate at the top, much like your credit card. Then, make your way down, assigning debts such as mortgages, student loans, car loans etc., into their rightful positions based on interest rates or fees.
Be wary of ‘buy now, pay later’ programs, such as Afterpay or ZipPay. While easy to use and usually requiring no more than a few taps, these payment methods can quickly plunge you into financial despair. Miss one payment? You will likely cop a late fee, then another, and another, making it a tough cycle to break. The bottom line here: try not to spend money you don’t have.
Much like that assignment you said you’d finish yesterday, or that pile of washing that’s been staring at you for days, it’s easy to leave bills and repayments to the very last minute, or even worse, until they’re overdue. Consider allocating some time every month to review any owing or upcoming payments. If you find forgetfulness is often the culprit, consider setting up direct debts where you can.
Proactively managing your finances is the very best way to boost your financial wellbeing, lower stress, and keep you feeling your best during these uncertain social and economic times.
