The Northern Territory news Tue 6 May 2014
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TUESDAY MAY 6 2014 BUSINESS 23 V1 - NTNE01Z01MA HQmoney saver Lack of early savings one of our greatest regrets AUSTRALIANS failure to stash cash at a young age is one of their biggest financial regrets. Signing up to a credit card and struggling to stick to a budget are also among the key monetary mishaps many wish they never experienced. REST Industry Super quizzed 1000 people aged 35-55 to find out what financial lessons they have learnt and how their attitudes towards their finances have changed. It found more than half (57 per cent) would start saving earlier, 38 per cent would stick to a budget and one in four would not get a credit card. REST chief executive officer Damian Hill says it is critical to take sound advice from others. While almost one in two said their parents were their primary source of financial advice a very low percentage (1 per cent) said they have received professional advice, he says. That would have made a difference for a lot of these people. In these younger years, Australians spend their time training and educating themselves ... but one of the key things they could educate themselves that would pay off in spades is the basics of managing their finances. Australian Securities and Investments Commission senior MoneySmart executive Miles Larbey says getting bogged down with hefty credit card costs is a common error for many younger people. The average credit card balance is over $4000 and that can take more than 25 years to pay off if you are only paying the minimum. If you max out your credit card at a young age, you can still be paying it off many years down the track, he says. Larbey says good savings habits from a young age is crucial because of the power of compound interest. The earlier you start saving inside superannuation for your retirement or outside super, the earlier you start the magic of compound interest, which makes a huge difference. SOPHIE ELSWORTH Budget bliss gone amiss Men talk up their money management skills but women come out on top, writes Anthony Keane 8 ways to control your spending 1. Keep a daily spending diary for a period to show you where your money goes. 2. Dont carry extra cash as you will always find something to spend it on. 3. Use online tools such as MoneySmarts budget planner or CBAs MySpend to help you manage your money. 4. Pay your bills online if possible so that you have a record of your spending levels. 5. Limit your spending to one or two bank accounts. 6. Write down savings goals and keep them somewhere convenient to review. 7. Pay yourself first. Put money aside in a separate account before you pay loans and bills. 8. Before spending, always ask yourself do I really need this? MILLIONS of Australians do not know where they spend their money each month, putting at risk their chances of getting ahead financially. Commonwealth Bank research shows four out of five people cannot recall, within $100, how much they spend monthly on key areas such as groceries, transport, utilities and leisure. Men say they are better than women at remembering what they pay, but women are more likely to do a budget. A majority believe they are better at sticking to a budget than their partner, and more than 80 per cent think it is important for partners to share responsibility equally for household finances. Tammy May, the founder of MyBudget, manages the money in her household but she says her fiance Nathan Barton is also sensible with money. Communication is vital, May says. We see so many people argue and fight over finances because they dont communicate about where theyre spending their money, the debt they have got, and what they would like to save for, she says. The CBA research found that about half of Australians set a budget, but only 28 per cent budget for gifts and 38 per cent budget for leisure activities. Drew Unsworth, CBAs general manager of online banking and digital channels, says gifts and leisure are discretionary items and can be impulsive. It can be hard to budget for an impulse purchase, he says. Many people look only at their big spending numbers and forget small transactions. Getting familiar with online banking tools will be a big help with tracking and understanding a budget. Financial Counselling Australia executive director Fiona Guthrie says without a budget, your money controls you rather than the opposite. People have not been taught to budget by their parents, who were not taught by their parents, she says. There are not many open conversations about money and budgeting in relationships. Guthrie says women tend to do the majority of household budgeting because they are the ones who pay the bills and answer the calls if the bills have not been paid. They also tend to say they stress more than their partners. Check out our budget calculator LOG ON NOW moneysaverHQ.com.au Source: Financial Counselling Australia, the Commonwealth Bank BALANCING ACT: Nathan Barton and Tammy May. PARENTAL PEARLERS: David & Libby Koch reveal how to make your kids rich
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