Four Top Tips to Spring Clean Your Finances

Spring Clean FinancesSpring is upon us here in Australia and that means you should be getting down-and-dirty with some spring-cleaning action.  But before you bring out the mop and bucket, first grab yourself a pen and paper and get started on spring cleaning your finances.

Money, or a lack of it, can be a major cause of stress and worry. In fact 40% of Australians admit to being “stressed out” over money, with women more likely to be worried than men. So because I’d rather spend my summer holidays worrying about whether the weekend weather is going to be beach perfect, I’m getting my finances in order now.

It’s Time to Start Probing

You know those bank statements you’ve been tossing onto your desk in a big pile all Winter. Go get them out and open them. Yep, all of them. You’re going to go through each statement line by line with a view to working out where all your money is going.

Paying for a gym membership whilst your gym bag has spent the last six months hanging out in the bottom of your wardrobe? Have a Quikflix subscription but never have time to watch the movies they send you? Stacking up your magazine subscription next to the couch for that mystical day when you’ll have time to read them?

It’s time to make some cuts. Get on the phone and start cancelling all those things you are paying for but aren’t using. I’m sure they were a great idea at the time, but now you’re just throwing money away.

Pro Tip: Need motivation to start exercising outside of a gym. I use Runkeeper combined with Pact to track my runs and get paid for it!

Screw Down Your Suppliers

Alright, you’ve been through and cut out all those unnecessary expenses coming out of your account. Now that you’re left with your essential items, like utilities, phone and internet, and cable (insert argument about cable being essential/non-essential here), you’re going to start screwing down your suppliers. Mind out of the gutter please, I’m talking about getting the cost down.

Get on the internet and start shopping around. If you find a better deal on something you’re paying for, call your supplier to match or better yet beat it. If they’re offering enticement deals to new customers, ask for the same thing or tell them you’re walking. Financial belt tightening hasn’t just affected households, and businesses know it’s easier to keep an existing customer than find a new one.

Pro Tip: You can use online comparison services to compare prices on a range of products, but remember they often don’t represent all providers in the market. If you can, find a government-backed comparison service to get the full picture.

Get Yourself an Insurance Policy

What would happen if you were unable to work for six months or more? How long could you last before you couldn’t pay the bills? Of course having an emergency fund can save you from minor stress, but if you’re injured or sick and can’t work for a long time then you’ll need a bit more money to tide you over.

Insurance is a great way to get some peace of mind and reduce stresses about money. Go through all your insurance policies and make yourself aware of what you are covered for. Most people think about insuring their house and contents, car and expensive items, but often forget about or under-insure for the more important things like Life insurance and Income Protection cover.

If you’re young and don’t have kids you can probably get away with not having Life insurance right now. But at the very least you should get some Income Protection insurance to cover your basic living expenses. And in Australia, this insurance can be funded from your superannuation so it won’t have an impact on your take home pay.

Pro tip: You can do the research yourself, or find an independent financial advisor to do the leg-work for you. Make sure your adviser works with a range of insurance providers and is certified by the FPA.

Start Planning Your Retirement

When you’re young, retirement seems so far away. But unless you enjoy spending all day watching Days of Our Lives and eating HomeBrand groceries, you are going to need more money to live on than the pension. Start thinking about your retirement when you’re young and when the time comes you can live it up on the Senior Princess Cruise instead.

First thing is to make sure that all your superannuation is in the one place. If you’ve changed jobs a lot then chances are that your money is scattered across a few accounts. Thankfully it’s easy to search for and bring all your super into the one place.

You should also review your current super fund to see how it is performing and what the fees are. You should make sure that you’re not paying too much in fees – even a 1% difference in fees can have a massive impact to your retirement balance.

Also use this time to review the investment option that you are in and decide if it’s right for you. Most funds default to a Balanced option which is around 50% growth assets. But if you’re young you’ll want to take advantage of more aggressive options. A good general rule is that the percentage of growth assets should be 110 minus your age. So someone in their 20s or 30s should be invested in a 80% to 90% growth option.

Pro Tip: Look at whether you can get tax breaks for contributing more to your or your partner’s superannuation. 

Whew, that seems like a long To Do list. But imagine the satisfaction you’ll feel once you’ve saved yourself a bit of cash and sorted out your financial future. That’s even better than finding $2 behind the couch cushions.

This post was first published on 5 September 2013.

What Online Dating Can Teach You About Investing

Back in my free-and-single days I dabbled in online dating. I figured it was an easy way to meet guys, go on a few dates and potentially find something long term.

After quite a few dud dates, and a few that were slightly more promising, I quickly realised that there is definitely a strategy to successful online dating (however you define success). In fact I became quite adept at evaluating a guy’s potential based on his profile and initial messages.

Even though my single days are behind me(phew!), I’m still using the lessons learned from online dating today when it comes to my personal finance. The principles behind online dating success and investing are incredibly similar and lessons learned from online dating can make you a better investor.

Why Investing is Just Like Online Dating

It’s Time In, Not Timing That Counts

Think you can create your profile on Eharmony and have a marriage proposal by next Sunday? Not going to happen.

Successful online daters know that the longer you are a member of a site, the better your chances of finding luurrve. You can’t expect that the day you join your perfect match is signing on as well. You’ve got to play the long game and put in a bit of time and effort to yield results.

Investment markets work in the same way. You can’t predict when the market is going to rise and fall, so stop trying to work out the perfect day to buy in. Successful investing is based on playing the long game, and spending a lot of time invested in the market before you can expect to see a positive return.

Expecting to double your profits in a week is about as likely to happen as finding a Brad Pitt look-a-like on the first day you join

It’s All About Diversification

Smart online daters know that they can’t limit themselves to just one site.

With so many online dating sites out there, how can you be sure that Mr Right has joined up to the same one as you? If you limit yourself to just one or two dating sites, you are shrinking your potential market and limiting your chances of success. By joining more sites, you increase your chances of finding a profitable site, and can hopefully mitigate the losses from joining a dud site.

The same theory applies to investing. Buying only one or two stocks is too risky and increases your chance of losing money. But buying a number of stocks lessens the risk of any one stock under-performing and improves your chance of a positive return.

Also think about the different markets that each of the online dating sites cater for. Big, generalist sites are like your Exchange Traded Funds – they encapsulate a large part of the market and represent the major interests and personality types.

But if you are into something a little quirkier and want someone who shares your interest, then you could also look to join dating sites that cater to a specific niche, like or (I don’t actually know if these sites exist or not, but it’d be cool if they did). With each site catering to a different market (read: industry sector) you increase your chances of success.

Beware of Too-Good-To-Be-True Investments

Ok ladies, I know we’ve all been there. He sounds perfect in his profile. He’s got a fancy car, his own house, he’s (definitely, probably) about to be made partner, and he’s looking to get married right away. Where do I sign up?

But what is all that bling and flash really hiding?

  • Massive debt from his car loan and student loan repayments?
  • Oversized mortgage on his too-large house?
  • Life long commitment to ongoing credit card payments?

Just like with online dating, if an investment sounds to good to be true, then it probably is.

If you’re being promised returns over and above the market, or that the stock price is just about to ‘go crazy’, back away. Just like our debt-riddled lawyer, this is one stock you don’t want to hitch your cart to.

Know When to Cut Your Losses

You’ve messaged back and forth and maybe even met for coffee. You started out intrigued, but unfortunately now you’re starting to think this guy is maybe just a little bit boring.

But you’ve already put so much time and effort into this relationship. There seemed to be so much potential that you don’t want to just end it now. What if you’re wrong? What if this relationship is just about to go on an upswing?

Just as with online dating, when it comes to investing you’ve got to know when to cut your losses. Sure, it can be hard, especially once you’ve invested time, money and effort into a stock. And your date probably did appear to be a great investment at the time.

But now the stock price has fallen and you’ve got to accept that this one may not ever come good. And at the same time you’ve got your funds tied up and could miss out on another stock with even greater potential.

In online dating and in investing, if you’ve got doubts it’s almost always better to cut your losses now before it all comes crashing down in six months time and you end up curled up in a ball, full of tears and what-ifs.

Don’t Give Up After One Bad Date

Anyone who has tried online dating has probably come across a dud or two. But what separates the successful from those who swear off online dating forever is that smart investors realise you’ll have to go on a few bad dates before you find something worth pursuing long term.

Just because you’ve been burned once or twice doesn’t meant the online dating market as a whole is worthless. The same way just because you’ve got a few crap stocks in your portfolio, doesn’t mean the stock market as a whole is a bad investment.

In fact, going on a few dud dates will likely make you better at spotting the signs of poor potential. You now have a better idea what to look for, so each new date should be a better investment of your time.

Similarly, buying a few dud stocks just means that you become better at assessing a stock’s potential in the future and the more stocks you buy, the better you are at picking the right ones.

Whether you are building your investment portfolio or looking for someone to spend the rest of you life with, you’ve got to put in a bit of time, money and effort. But it pays to be smart and not get too caught up in your emotions or try to ‘play-the-game’. By trusting your instincts, you can come away with a happy relationship and a growing investment portfolio.

Tell me your thoughts. Have you ventured into the investment market? What other dating lessons can be applied to money?