Personal finance might seem to cover only the big stuff – student loans, house mortgage, income taxes. However, in this case, small daily expenses matter, as they add up to significant amount of your spending. By cutting seemingly negligible costs, you can earn tremendous cumulated savings and avoid unnoticeable drain on your bank account.
Here are a few ways to cut spending on your monthly expenses:
Buy Refills and Refillables
By purchasing refillable products, you can save up on a lot of consumer goods. For example, using refillable bottles would encourage you to get free tap water instead of getting ready-to-buy packaged water. Other goods such as handwash, laundry liquid, and cleaner also come cheaper in refill than in regular packages.
Set Up Limits
Want to curb the urge to shop? Set up a credit card limit and a spending cap to ensure you don’t go past a certain amount. You can go even further by setting up limit per transaction and daily card withdrawal limit.
Pay Your Debts in Full, Right Away
When it comes to credit cards, always strive to pay the bills in time, in full amount to avoid extra surcharges. You can do this by opting for automatic bill payment with your bank.
Re-evaluate Your Current Utilities and Services
You indeed need electricity, phone and entertainment plan, but are you sure your current plan brings the most value for money? Contact the customer service to see if there is any way to reduce the bills without losing the essential features that you need. Chances are you might not actually need that second Netflix screen!
Go for Home Brands
If you don’t have any preferred brand for a household product, you might be better off purchasing the more affordable home brands – they can do the same job for less dollar per gram.
Walk or Ride a Bike
Bus ticket fees might seem inconsequential, but you’ll be surprised by how much it costs when you walk or bike for a change. This might not be applicable for long commutes, but this would still be great for going places locally. Bonus point: walking and biking are great exercises. Who says you need gym membership to stay fit?
In buying groceries and other household goods, opt for discount retailers and thrift shops – the competitive price will lift the burden off your wallet.
Shares in Unilever have slumped by 7 per cent after Kraft Heinz withdrew its takeover bid of $US143 billion.
Kraft sought to buy Unilever, merging the two companies into a global consumer goods giant. However, a joint statement released on Sunday revealed that Kraft had “amicably agreed” to pull its offer.
Unilever’s London-listed shares, which rose by 13 per cent to set a record high when the bid was announced on Friday, were down 8 per cent after the withdrawal, while its Dutch-listed shares fell 7 per cent.
Despite the fall in stock prices, analysts and shareholders believed it was unlikely for Unilever to discuss another takeover deal. “A takeover at a later stage seems unlikely to me as Unilever will build their defense and sharpen their focus on profitability,” a major Unilever stockholder told Reuters.
Raphael Moreau, food analyst at Euromonitor said it was unlikely that any other company would be able to handle the acquisition of a company as big as Unilever. “Maybe they realised the price would have been too high to be feasible or that the corporate culture would be too different or too much of a hurdle and that created a long and convoluted process that would ultimately damage both companies,” said Moreau.
Despite many Australians opting not to heat their homes to the point of complete comfort, many of us nevertheless will soon receive a nasty surprise when the energy bills arrive.
With Australia’s historically cheap energy, old housing stock in many areas, mild climate and frequent emphasis on low building costs, many homes are little more than “glorified tents” when it comes to thermal performance.
So here is a list of 22 things you can do to improve your home’s energy performance – some cheap, some free, and some that can even make you some money up-front as well as cutting your bills. Of course, to reach the ultimate goal of a home heated and powered by 100% renewable electricity you may still wish to put some solar panels on your roof, but why not consider the following actions first?
1. Make sure you get the maximum discount on your energy bills. Although not available everywhere, in Victoria discounts of up to 38% are available on gas or electricity. Ring up your retailer and just ask, or threaten to switch, or better yet seek out a retailer that doesn’t treat their discounts like state secrets.
2. Monitor your power usage with the help of a “smart” electricity meter or in-home electricity display. This real-time (or near-real-time) information is more useful than the coarse monthly data commonly printed on energy bills. It can help identify appliances that have inadvertently been left on or those that draw excessive power when not in use.
3. Heat your water off-peak. If you have a resistive-electric hot water storage tank, make sure it heats up at night, when off-peak power rates apply. In some areas, “time of use” rates are available.
4. Get rid of your ‘garage fridge’. It can cost hundreds of dollars a year to run an inefficient 20-year-old fridge, especially if it’s in a garage that hits 50℃ in summer.
6. Install a modern showerhead, such as those designed with double-impinging jet technology that use only 5 litres of water per minute. Old showerheads can pass up to 35 litres per minute. Why not grab a bucket and stopwatch and test yours?
8. Check your heaters and air conditioning. Gas heating systems should be checked at least every two years by a qualified person, not least to keep poisonous carbon monoxide gas at bay. All heating or cooling system filters should be cleaned regularly to improve energy efficiency and air quality.
9. Inspect your ducts. Poorly installed or degraded ductwork can lead to big energy losses, which can go unnoticed for decades. Ensure that small children or animals have not gone under your house and damaged your gas heating ducts. Check also that air returns are properly “boxed-in” and do not draw air in from the wall cavity instead of from the living space. However, cleaning the inside of your ducts is not critical for energy saving, and risks damaging them in the process.
10. Banish drafts, for instance by plastering over those ubiquitous wall vents – relics from the days when homes relied on unflued heaters or gas lights. Seal off unused chimneys and fill any other cracks, gaps or holes around doors, windows, skirting boards, floorboards and architraves. Remember to close air-conditioning ceiling vents in winter. Ventilation should be controlled by opening windows, not by having permanent holes in the walls.
11. Eliminate ceiling-mounted downlights wherever possible. A small number of modern wide-beam LEDs can adequately replace a larger quantity of narrow-beam halogen downlights. Aim to have as few holes cut into your ceiling as possible, because these holes let heat escape in winter and let it in during summer.
12. Install downlight covers over all downlights that protrude into accessible attic spaces. Not only does this reduce fire hazards and keep out insects, but it will also reduce air flow through the roof.
13. Replace all regularly used lights with LEDs. LEDs use a tenth of the energy of halogen or incandescent bulbs, so will pay for themselves in just a few months (even less in places where free replacement is on offer). Replace less regularly used bulbs with LEDs as and when they burn out, and vow never to buy a non-LED bulb again.
14. Insulate your attic…. If you don’t have roof insulation, buy some. If you do, check it meets the recommended “R value” for your climate. Ensure all vertical attic surfaces (walls, skylight tunnels) are also insulated, and include a layer of aluminium in your attic space. Thermal imaging can be used to identify existing flaws, such as gaps or sections of insulation inadvertently moved by tradespeople working in the attic.
15. …and your floors and walls too. In cooler Australian climate zones, floor and wall insulation can help keep heat in, making your home warmer and cheaper to operate.
16. Cover your windows from the inside… with drapes, curtains or blinds. This will keep in heat at night and on cold winter days, and keep out the sun in summer. Cheaper or do-it-yourself thermal window treatments such as plastic films or even bubble wrap can be applied in some situations (just don’t expect to win any design awards).
17. …and the outside. Trees, plants, external awnings, blinds or shade sails can all keep out the summer sun and stop windows getting hot. Remember that significant heat will reflect onto windows from sizzling decks, paved areas and walls (but not lawns). It’s better to keep out the sun in the first place rather than try to cool your house down.
18. Double glazing for windows cuts out noise, improves security and saves energy too. For many Australian climate zones, I recommend that homeowners never buy a window in future that isn’t double-glazed. Retrofit options options such as “secondary glazing” are also available.
19. Fit a pool cover if you have a swimming pool. Not only will this stop the water cooling down overnight in summer, but a cover can also minimise cleaning, chemical use and the running time for your filter pump. Consider upgrading to a more efficient pump if yours is more than a decade old, and ensure it does not run for more hours each day than required.
21. …and your water. If your hot water system is nearing its use-by date, consider replacing it with a heat pump. This is an especially good option for homes that already have solar panels and low feed-in tariffs.
In Australia these days, you won’t be paid much money for selling your electricity back to the grid. However, it might still pay to install solar if you can consume most of the energy yourself, by running your pool pumps, appliances, space heating and cooling devices, hot water system and even an electric car with solar electricity harvested during the day.
This article doesn’t list every possible behavioural trick or home improvement. Sadly, some homes will never be fantastic energy performers without significant modification. But hopefully there are a few things on this list that will work for you – even if it’s only a case of finally covering that drafty doorstep, or giving your creaking “beer fridge” a dignified retirement.
Freelancing has become a dream for many due to its promising freedom – being able to choose your own jobs, set your own working hours, and avoid the usual office structures. However, there are also more risks in freelancing, such as irregular income, lack of health insurance and more. Here are a few tips to help you manage your finances as a freelancer.
Save up for emergency fund
The common advice is to save up three to six months-worth of living expenses as an emergency fund, but Bundle suggests freelancers should save up six to nine months. This is to prevent financial breakdown when there are no jobs, or when the payment from client doesn’t come on time. Jamie Beckman, New York-based freelance writer and author of The Frisky 30-Day Breakup Guide, saved about seven months’ worth of money before jumping into the field. “In retrospect, I’d probably recommend saving more than that just in case,” said Jamie.
“I was able to get a good amount of work right off the bat, so I haven’t been dependent on my savings (knock on wood!), but having a healthy financial cushion buys me peace of mind.”
Track your time
According to freelance writer Laura Shin, tracking the time spent on work will help you calculate your income per hour, per job. “A freelancer’s main currency besides money is time, so it’s imperative to know how you’re spending it,” said Shin. “That per-hour “rate” also helps me see what places I should work for less, where I should try to work more, or even where I might want to request a raise.”
Set your rate accordingly
“If you’re used to thinking about the $X/hour rate from your old job, that rate won’t work now that you freelance, unless you are able to fill all 40 hours of your week working on projects,” said Shin. “Most freelancers will need to charge rates that take into account the time you’re running your business but not necessarily charging a client, plus the additional expenses of paying your own benefits.”
For example, a freelance graphic designer should not only charge for hours spent working on an ordered project, but also the hours spent on researching, liaising with the client(s), and other additional expenses which might not be directly related to the project, such as electricity, internet, health insurance and more.
Discuss milestone payment plans with your clients
When involved in a long-term project that spans multiple weeks or months, it is wise to discuss a milestone payment option with your client to make sure you receive income on a regular basis throughout the period rather than having it all sent in one go at the end of the project. Walter Green of Lifehacker suggests three ways to make it work:
“If a job is for a certain time period or number of hours, make sure you can bill your client each month or for every so many hours you log. If there are obvious milestones within the project, set up your billing around those. If nothing else, break the job up into 25% blocks and bill for each of those.”
As Australian residents, we already have a public health insurance – Medicare, which provides you with free or subsidised access to a variety of health care options. However, what about private health insurance? Should you get an additional one, or is your money better spent elsewhere?
The advantages of getting a private health insurance are quite numerous: those with private health insurance have more freedom in choosing preferred doctors and specialists, quicker access (read: shorter waiting time) for elective surgeries, and access to services that are not covered by Medicare such as dental, optical, physiotherapy, and chiropractor.
Private health insurance can also be used to gain some financial benefits. If you earn more than $90,000 per year, or if your family earns more than $180,000, taking a private health insurance will exempt you from the Medical Levy Surcharge, which ranges from 1 to 1.5 per cent.
Medical levy surcharge rate, 2016-2017 and 2017-2018. Source: ATO
For those aged 31 years old and under, owning private health insurance would also avoid them from paying extra lifetime health cover loading. Taking private health insurance after the age of 31 would render one liable for extra two per cent surcharge for every year delay.
It is best to consider if these advantages suit your financial circumstances. For more information, read up The Conversation‘s and CHOICE‘s articles on this subject. You can also take a quiz to see if you really need a private health insurance.
Prime Minister Malcolm Turnbull said while US’ withdrawal represented a “big loss”, the deal should not be abandoned.
“It is possible that US policy could change over time on this, as it has done on other trade deals,” Turnbull said. “There is also the opportunity for the TPP to proceed without the United States. I’ve had active discussions with other leaders as recently as last night.”
Turnbull also said Japanese Prime Minister Shinzo Abe, whose country was the only one to have ratified the deal to date, reiterated his commitment to the deal through a phone call on Monday.
Trade Minister Steve Ciobo said he had reached out to fellow signatories. “I’ve had conversations with Canada, with Mexico, with Japan, with New Zealand, with Singapore, Malaysia,” Ciobo told the ABC on Monday. “So there’s quite a number of countries that have an interest in looking to see if we can make a TPP 12 minus one work.”
Ciobo also said the deal had been designed to enable other countries to join.
“Certainly I know that Indonesia has expressed a possible interest and there would be scope for China if we were able to reformulate it to be a TPP 12 minus one for countries like Indonesia or China or indeed other countries to consider joining and to join in order to get the benefits that flow as a consequence.”
Housing investment in New South Wales continues to grow as current levels are getting close to record highs, new Australian Bureau Statistics reports revealed.
Latest ABS data found that the value of residential lending in the state reached $7.19 billion in November 2016, the highest on record for the year and a significant 25.5 per cent increase from the previous month’s $5.7 billion.
The November value was also the second highest on record for NSW, with the highest being $7.36 billion in June 2015.
Investor loans constituted 56.7 per cent of all approved residential lending in NSW over the month, making it the highest market share nationally, followed by Victoria’s 45 per cent.
NSW’s residential investor lending represented 56.1 per cent of all approved lending in Australia in November. “This is clearly a record result, eclipsing the previous high of 48.8 per cent reported over March 2016,” said Andrew Wilson, chief economist at Domain Group.
“The strong Sydney market remains a magnet for investors with demand set to continue to rise attracted by continuing solid price growth and a tight rental market with rising rents consolidating gross yields.”
Wilson expected the NSW market to continue its growth, prompted by the possibility of better investment property taxes and rate cuts after 2015’s hike in mortgage rates.
“Residential investors have stormed back into the market since May 2016 driven by the prospect of possible changes to the tax treatment of investment property and interest rate cuts,” said Wilson.
“NSW generally and Sydney specifically remain the epicentre for what has re-emerged as unprecedented activity from this group.”
Cameron Kusher, head of research at CoreLogic said while NSW and Victoria might seem promising, investors should be mindful of the long-term risks.
“It’s clear that demand for mortgages from the investor segment is picking up, particularly in New South Wales and Victoria, which are proxies for Sydney and Melbourne respectively,” said Kusher. However, he added that investors should also think about the risks from long-term value growth phase as well as the historically low rental earnings.
Sydney, which is only topped by Hong Kong, beats other cities including San Jose (fifth most expensive) and Los Angeles (eighth).
The survey rates housing markets based on the World Bank-recommended “median multiple” principle, which divides median house price with median household income. A score of 5.1 and above is categorised as “severely unaffordable”.
10 Least Affordable Housing Markets
1 Hong Kong 18.1
2 Sydney, NSW, Australia 12.2
3 Vancouver, Canada 11.8
4 Santa Cruz, CA, USA 11.6
5 Santa Barbara, CA, USA 11.3
6 Auckland, NZ 10
7 Wingcaribbee, NSW, Australia 9.8
8 Tweed Heads, NSW, Australia 9.7
9 San Jose, CA, USA 9.6
10 Melbourne, VIC, Australia 9.5
The report found that 47 of Australia’s 54 markets are categorised as “seriously unaffordable” or “severely unaffordable”. The report’s co-author, Hugh Pavletich said the contrast between Australia’s land size and its housing prices indicates a “decentralisation” issue.
“State and local governments have lost the control of their costs and their capacity to finance infrastructure properly,” said Pavletich.
“Sydney house prices are about 12.2 times annual household incomes which is grossly excessive… What housing should be in normal markets is at or below three times household earnings, so Sydney is four times what it should be.”
The newly-sworn in NSW premier, Gladys Berejiklian said in her first press conference that housing affordability would be one of her policy priorities.
“I want to make sure that every average hard-working person in this state can aspire to own their own home,” said Berejiklian.
Do you procrastinate about taking care of financial matters in your life? Recently a fascinating article about financial procrastination appeared online.
The author publicly admitted that “after years of procrastinating,” he finally logged on to his retirement account. It took him years to get around to dealing with it because the entire task made him anxious.
Moreover, he stated he didn’t remember his password, and his account choices were a mess.
For many of us there is nothing special about any of this. Most people dread and put off dealing with financial matters.
However, what was astonishing about this story is that the writer is an eminent economist who does research in personal financial matters such as savings, annuities and mortgages. If this man has trouble dealing with his retirement accounts, is there any hope for the rest of us?
Do you have to be smart to be rich?
There are many reasons people procrastinate on dealing with financial matters. There is even a new special field in psychiatry that deals with the issues people have surrounding money, spending and saving. Unfortunately, while many of us have issues about money, the specialized help that is available is primarily useful for people with lots of wealth or income.
Some of my research can help people who procrastinate about dealing with their finances. One reason many people don’t want to deal with money issues is because they think they are not smart enough. However, when I looked into this, the results were very clear: there is no relationship between intelligence, measured by IQ, and a person’s wealth. It’s generally true that the smarter you are, the more income you earn. However, earning more doesn’t give you any special advantage in saving or building wealth.
Sendhil Mullainathan, the economist who wrote the column on procrastinating, appears to be a poster child for the lack of a relationship between IQ and wealth. He is clearly very smart: he won a MacArthur genius award and is a full professor at Harvard.
But he probably doesn’t have much wealth since he states in the article, “I want to reach my retirement with a nest egg that allows me to maintain my current lifestyle and to travel a bit.” Rich people don’t dream of retiring with just enough money to take a few trips.
If you are putting off dealing with money issues because you don’t think you are smart enough, don’t wait any longer. Being smart isn’t going to make you rich. Whether you are dumb or smart you can save. The secret is simple: just spend less than you earn.
Are you richer than you think?
Many people don’t want to deal with their financial issues because they expect the news to be depressing. Most of us are experts at avoiding bad news. However, another research paper I wrote shows that for most people, the financial news is actually much better than expected, which is perhaps another reason not to procrastinate.
The National Longitudinal Surveys, a long-running research project sponsored by the Bureau of Labor Statistics, asked people to estimate their net worth. Then the survey took them step by step through the value of all of their assets and the value of all their debts. From this information I was able to calculate their actual net worth. The result for most people was much better than they feared. For every dollar of wealth actually held, the typical individual believed they only had 62 cents.
In simple terms, the research showed that the typical person underestimates their financial position by more than a third. The financial unknown is scary but the actuality for most people is not as frightening as they fear.
I encourage all of you to sit down, close your eyes and ask yourself: are we in debt, break even or do we have money? Write down your best guess for how much you are in debt or how wealthy you are. Then add up all of your assets and subtract all of your debts (an easy online calculator is available here). The results will pleasantly surprise most of you.
Why should you avoid procrastination?
Research suggests people who avoid procrastinating do financially better. A recent working paper by two economists Jeffrey Brown and Alessandro Previtero shows that people who procrastinate are less likely to participate in savings plans, take longer to sign up when they do decide to participate, and contribute less money to their retirement plans than non procrastinators.
You will not become rich or suddenly have enough money to retire by reading just one article. However, know that lots of people procrastinate about financial matters. If you have been procrastinating because you don’t think you are smart enough or because you fear the results, research suggests you will find the news is not bad.
So make that first step and try to deal with that financial task you have been putting off. It is like jumping into a pool, lake or ocean; the water is really not as bad as you fear, and taking the jump will likely make you (feel) richer.
Petrol prices have risen by up to 20 cents a litre in a number of areas in Australia, following the December agreement between the Organisation of the Petroleum Exporting Countries and non-OPEC oil producers to cut production.
While Melbourne prices remained steady at $1.22 per litre, Sydney and Adelaide’s prices reached above $1.40. Other capital cities fell in between these extremes, with prices around $1.30 a litre.
There were also some local variations, with some parts of Tasmania – such as Hobart and Launceston – reaching $1.46 a litre.
Experts have recommended motorists to fill up quickly before the prices rise even further.
“The low petrol prices are not sustainable and prices are likely to lift markedly in coming days,” said Savanth Sebastian of stockbroking firm CommSec.
The Australian Competition and Consumer Commission (ACCC) warned that the price hike could be exacerbated by the falling Australian dollar.
“The ACCC is concerned that petrol prices are increasing in Sydney, and those in Melbourne, Brisbane and Adelaide may increase in the coming days,” said ACCC chairman, Rod Sims.
“Motorists should get in early, shop around, and consider filling their tanks before prices jump.”
Sebastian said the petrol price hikes would be applied around the world.
“The focus now shifts to see if oil producers comply with the stated production cuts,” said Sebastian.
“The early indications are that producers are already notifying customers in Asia, Europe and the US of cuts to oil deliveries from January. Importantly for motorists it means higher pump prices in the medium term.”