How to Manage Your Money by Setting Financial Goals

Setting financial goals is a great way to ensure you’re always in control of your personal finances. Whether you’re looking to save towards a particular purchase or simply want to manage your finance so you spend less, using financial goals as a motivational tool can help you achieve your aims and even make you happier.

What are Financial Goals?

A financial goal is simply a target you set yourself within your own personal financial circumstances.
Some examples of financial goals might be:

• To spend less on your weekly household shopping.
• To save towards making a large purchase, such as a deposit for a home or a holiday.
• To put more money in your child’s bank account or trust fund.

These goals are quite general, but you can tailor them to meet your own individual circumstances. Specific financial goals based on the above might be:

• Reduce my weekly shopping bill from $150 to $120.
• Save $200 a month to pay for a holiday next summer.
• Commit $30 per month extra to my child’s bank account.

The numbers will change depending on how much disposable income you have and the balance of your spending at present, but these suggestions should give you some idea of how you might want to lay out your financial goals.
You can also look to intertwine your financial goals. For example, in the points above we may use the $30 saving from the weekly shopping bill as part of the holiday savings fund, or use the saving from the first week of the month to pay the additional sum into the child’s bank account.

Why are Financial Goals Important?

As the saying goes, ‘tomorrow never comes,’ and when it comes to financial goals the same is often true.
If you have financial goals then you’ll immediately have a focus and put your mind to achieving your aims.
Knowing why you’re saving money is also a key factor in helping you to achieve your goals. If you’re putting money aside but for no specific reason, you’re more likely to dip into it, as you’ll have less to worry about when spending it. That said, there’s nothing to say you can’t use ‘saving for a rainy day’ as a goal, so long as you’re confident you’ll have the discipline to keep saving!

“If you have financial goals then you’ll immediately have a focus and put your mind to achieving your aims.”

Setting Your Financial Goals

To set your financial goals you should make sure they’re all:

• Specific – Like our second example earlier, look to ensure the goal is as specific as possible. ‘Save $30’ is a much stronger motivator than ‘save something.’
• Realistic – if saving $200 a month is going to be difficult, save a lower amount. Remember you can always adapt your goal later.
• Flexible – As we’ve just mentioned, you need to set yourself goals but you should also leave yourself some room for change as your financial circumstances dictate.
• Time Based – Alongside having a specific goal, this will work as a great motivating factor and can even be used to dictate the goal you want. For example, ‘I want to save $1,500 in the next 12 months. I will do this by saving $30 a week on my shopping bill.’

Another thing you should do is break your goals down into short term, medium term, and long-term goals.
Again, your personal circumstances may dictate that some goals need to be short term rather than long term, which may in turn influence how you set your own goals.
Below are some examples of the types of goals that might fall into each category.

• Short-term financial goals – What do you want to achieve in the next six to 12 months? This could be linked to saving a certain amount for a holiday or towards the festive season, or if you have a personal loan or credit cards, you might want to increase the amount you’re paying towards these.
• Medium-term financial goals – These goals might be ones that you will look to achieve in the next three to five years. Goals might be saving enough money to have a deposit for a home, buying a new car or paying off a hire purchase agreement, paying off a loan you recently took out, or saving a certain amount to a pension or your own retirement savings.
• Long-term financial goals – What are your wider aims in life? You might want to build on your medium-term goal of saving towards retirement and have a long-term savings plan, perhaps even with a retirement date in mind. Other long-term goals might be to save enough to pay for your child’s further education, or towards a big, once in a lifetime holiday.

“Committing to and achieving your financial goals can help you live the life you want in the long-term, and the feeling of satisfaction you will enjoy when sitting on the beach or travelling around the world will be immense.”

Working Towards Your Financial Goals

While you might already have some ideas in your head of what you want to achieve within each category, ensure that you focus on your short-term goals first. This will ensure you don’t find yourself trying to achieve too many financial goals at once, which will likely lead to you failing to achieve any of them as you find you have too little money to commit to all of them.

What Will You Gain?

While financial goal setting and management can seem boring on the surface, once you engage yourself and think about what you can achieve, it’ll soon become apparent that it’s worth it.
Committing to and achieving your financial goals can help you live the life you want in the long-term, and the feeling of satisfaction you will enjoy when sitting on the beach or travelling around the world will be immense.


What you need to know

Constancy Wealth Management is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327 AFSL 232706 and Australian Credit Licence 232706. This information does not take your circumstances into account, so read the relevant disclosure documents and consider what’s right for you. If you acquire an AMP product or service, AMP companies and/or their representatives will receive fees and other benefits, which will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Ask us for more details.

This post contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information

How to Finance your Dream Wedding

Weddings are a big event, and for most people they represent the biggest and most important day in their lives up to that point. When planning a wedding, it is common for people to have grand ideas and dreams of what they want their big day to look like. It is also true that weddings come at a cost, and it isn’t usually a cheap one.
What are the different elements that go into a wedding that you’ll need to consider how to pay for?

• Cost of the ceremony itself
• The venue and transport to and from the venue
• Dresses for the bride and bridesmaids
• Suits for the groom and the best man
• The reception, and food and drink for all guests

That isn’t everything, but represents where the main expenditure will come from, while at this point you haven’t even considered the honeymoon, which can see the cost of a wedding double on the spot.
What options do you have available for financing your dream wedding?

Family Contributions

Parents of both the bride and of the groom may wish to contribute to the cost of the wedding. While traditionally, the father of the bride would make the biggest contribution and sometimes even pay for the whole thing, today it is commonplace for both sets of parents to help.
The one obstacle you do have here is that if it isn’t a conversation you’ve ever had in your family, even when you announced you were planning to marry, it might be a difficult one to bring up. If you’re uncomfortable doing so then you can go ahead and explore your other options, and you might even find that your parents mention it to you during your wedding planning, particularly if they take a close interest and are involved in helping you through the process.

Using Your Savings

Depending on how much money you and your partner have been able to save down the years, whether when together or when you were both single prior to meeting, your savings may easily be able to cover the cost of your dream wedding. If you choose to use your savings, you might need to compromise on various aspects of the wedding depending on how much money you have at your disposal.
If you would rather have a dream honeymoon over a dream wedding – or class the honeymoon as part of the wedding overall – then you may wish to use your savings on the trip of a lifetime and have a smaller wedding instead.
Before using your savings to pay for your wedding you should also consider whether you might want to use your savings for another purpose, such as buying a house if you have not already done so.

“If you choose to use your savings, you might need to compromise on various aspects of the wedding depending on how much money you have at your disposal.”

Take Out a Personal Loan

Constancy Wealth Management can find you personal loans to help couples enjoy their dream wedding, and if you’re able to repay a loan but don’t have the capital to finance a dream wedding upfront, it is certainly an option worth considering. You might choose to take out a personal loan to pay for the whole wedding and your honeymoon, or you may take out a loan to supplement any savings you and your partner have between you.

“You might choose to take out a personal loan to pay for the whole wedding and your honeymoon, or you may take out a loan to supplement any savings you and your partner have between you.”

If you choose to take out a personal loan using Constancy Wealth Management  to help pay for your wedding, either you or your partner will need to apply individually, as most lenders do not currently accept joint applications. If you are unsure whether you would be accepted for a loan, take the time to check your credit score prior to applying.


What you need to know

Constancy Wealth Management is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327 AFSL 232706 and Australian Credit Licence 232706. This information does not take your circumstances into account, so read the relevant disclosure documents and consider what’s right for you. If you acquire an AMP product or service, AMP companies and/or their representatives will receive fees and other benefits, which will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Ask us for more details.

This post contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information

How to Pay Off Your Personal Loan Quicker

When taking out a personal loan, you will do so ensuring that the repayment amounts you have committed to are affordable. We understand that your personal circumstances may change from time to time, and we would be sympathetic towards any customer that needed to revise their payment amount should they lose their job or face another scenario that would see them short on money for a period.

Likewise, personal financial circumstances can also change for the better, which may see a customer decide they wish to pay off more of their loan at once or make a larger payment as a one-off. This would help to pay off a personal loan quicker, while there may be other possibilities for doing so. At Constancy Wealth Management, our aim is to ensure that all our customers benefit from our simply personal service, and an important part of that is helping you to understand all your options for paying off your personal loan quicker.

What are the opportunities available to you?

Opting for Higher Repayment Amounts

By choosing to repay your personal loan over a shorter period, you will pay a higher amount each week or fortnight, yet save money over the course of the loan owing to the lower level of interest you will pay. Individuals will often choose a repayment amount that leaves them other disposable income, which is understandable. However, we would encourage you to look at your budgeting and try to choose as high a repayment amount as is manageable for you.
Don’t ditch your lifestyle completely and wipe out your disposable income, but do consider the options you will make by taking this route. You can call us to speak to one of our personal loan experts if you’re unsure.

“At now Constancy Wealth Management our aim is to ensure that all our clients benefit from our simply personal service, and an important part of that is helping you to understand all your options for paying off your personal loan quicker.”

Make a One off Payment

If you chose a longer loan term and lower repayment amount to err on the side of caution, you may find you have money left over at the end of the month. In this instance, you may wish to use this sum to make an additional payment towards your loan balance. Should you believe this is likely to be a scenario that will present itself during your loan term, you should check the terms and conditions regarding additional payments, as you may need to pay a fee.
Sometimes making one off payments will not actually save you any money, as the full amount of interest may still be applied and where fees are involved you may even end up spending more, though you will achieve paying off your loan quicker.

Consolidating Your Loan

If you have more than one personal loan, or you have a range of other debts that you are currently paying off, then a debt consolidation loan may be a suitable solution for you. While you will still be in debt, a consolidation loan will enable you to pay off an outstanding personal loan and may also mean you reduce your interest and repayment amounts.
Should you take the option of consolidation as a means of paying off an existing personal loan, you should consider the higher regular repayment or one off payment options when planning your debt consolidation loan period and regular repayment amount.

“If you have more than one personal loan, or you have a range of other debts that you are currently paying off, then a debt consolidation loan may be a suitable solution for you.”

Only Borrow What You Need

At Constancy Wealth Management, we’ll speak to you about the reason for your loan to ensure you only borrow what you need for that specific purpose. While borrowing more than you need ‘just in case’ might seem a good idea, ultimately it means you accrue more debt and therefore pay more interest than you really need to.

Paying Off Your Personal Loan Quicker

There are many factors to consider when planning to take out a personal loan. We recommend you look at all the options carefully to ensure you don’t spend more than you need to on interest, or take longer to pay off your loan than you perhaps need to.
You will always have options available for paying off your personal loan quicker, and can contact us at any time during your loan period, or before taking out a personal loan, to enquire about the options available to you.


What you need to know

Constancy Wealth Management is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327 AFSL 232706 and Australian Credit Licence 232706. This information does not take your circumstances into account, so read the relevant disclosure documents and consider what’s right for you. If you acquire an AMP product or service, AMP companies and/or their representatives will receive fees and other benefits, which will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Ask us for more details.

This post contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information

Setting Financial Goals that Work for You

You might not feel you are at a point in your life where you need to be setting financial goals or even worrying about your finances at all. However, planning for a secure financial future is something we all should be doing, and by setting financial goals we can retain control over most of our financial circumstances. Setting financial goals can also help if you have a sudden and unexpected expense, such as a medical bill, as you will be able to pay without necessarily needing to turn to a personal loan or another financial solution.

At the same time, many appreciate the value of setting financial goals, and actively look to save money on a monthly basis.

Setting Financial Goals that Work For You

The most important thing to consider when setting financial goals is that they are realistic relative to your personal circumstances. ‘Save $300 a month’ is an exciting sounding goal, but not everyone is going to be able to do it. By ensuring your personal financial goals sit firmly within what you are able to achieve, you will be more motivated to achieve them. That’s not to say you should set yourself what might be an easy goal of saving $10 a month so you can tell yourself at least you’re saving something! Look to find the perfect balance of something challenging yet motivating at the same time.

‘The most important thing to consider when setting financial goals is that they are realistic relative to your personal circumstances. By ensuring your personal financial goals sit firmly within what you are able to achieve, you will be more motivated to achieve them.”

Deciding Why You’re Saving

As noted earlier, one of the main reasons people don’t save or aren’t motivated to start saving is that they don’t feel they need or have reason to. If you don’t have a specific need or reason to save you can still do so, and call it your ‘rainy day’ or ‘emergency’ fund for when those unexpected life events and expenses do come out of the blue.
So far, we have spoken in terms of saving, but another financial goal you might wish to pursue is to rebalance how you spend your money. Instead of saying you’re going to save $12.99 a month by not using Netflix, you could say you’re going to use the $12.99 a month towards joining a sports club, for example. If you’re setting financial goals with your partner, you might look to save enough to be able to eat out together once a month.
Once you have an idea of realistic financial goals in relation to your circumstances, and whether these predominantly involve saving or rebalancing how and where you spend your money, you can start creating the personal financial goals that work for you.

Getting Specific and Challenging Yourself

Whether you’re rebalancing your spending or savings, it’s going to pay to be specific. By giving yourself vague financial goals such as ‘save some money,’ you’ll either end up like the $10 a month example above or not doing anything and saying that you will start tomorrow.
Using the examples we’ve already looked at and using some others, here are some financial goals you might want to consider:

• I will save $300 a month for my savings account.
• We will cancel our Netflix and Spotify subscriptions and use the saving to eat out once a month.
• I will spend $20 less a week on groceries, saving $80 a month for my savings account.
• I will buy a flask and take my own coffee to work, by not buying a coffee I will be saving $4 every morning.

The beauty of financial goals such as these is that they are simple, and it is easy to understand the impact even relatively small savings can have in the long term, and how you can use one financial goal to help you achieve another. By saving $20 a week on groceries and the same on a morning coffee, $160 of the $300 a month saving goal above has already been met.
How much and how easily could you save by making similar small changes?
You can also look at making bigger changes if you’re looking to save a significant figure. Might you have an opportunity to earn more money in another job, for example, which will then leave you more disposable income to either meet your financial goals easier or set yourself goals that are more challenging?

“Once you have set your financial goals the best way to be motivated is to think about them as short, medium, and long-term goals.”

Motivation

Once you have set your financial goals the best way to be motivated is to think about them as short, medium, and long-term goals. This can help you to focus your mind, and is particularly powerful if you are saving towards a big landmark purchase in your life.
Below are some brief examples of what might be considered as short, medium, or long-term goals. As with financial goals in general, where these fit for you will be specific to your own circumstances. Remember, the idea here is for these goals to work for you!

Short Term Goals

Think financial goals that you might like to achieve in the next 12 months. A short-term goal might be to save money in order to pay off a credit card or personal loan quicker, or to save towards a weekend break during the year.

Medium Term Goals

We’re now thinking three to five years in the future. If you’ve just taken out a personal loan, one of your goals may be to ensure you make the regular repayments on time and pay the loan off as soon as you can. If you currently don’t have any outstanding debt, you might want to save towards a deposit for a house or buying a car. Depending on your personal circumstances you might even choose to save towards a once in a lifetime holiday.

Long Term Goals

A big holiday might also be a long-term goal, but you could perhaps be starting to think about paying off your mortgage or your retirement, too.

Making Your Financial Goals Work for you

While there are several options available to you when it comes to setting financial goals, you should take time to consider the goals that will work for you and that are realistic and achievable. By setting specific goals that suit your circumstances, you will find yourself motivated and determined to reach them, and feel excited about the possibilities your financial goals can provide.


What you need to know

Constancy Wealth Management is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327 AFSL 232706 and Australian Credit Licence 232706. This information does not take your circumstances into account, so read the relevant disclosure documents and consider what’s right for you. If you acquire an AMP product or service, AMP companies and/or their representatives will receive fees and other benefits, which will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Ask us for more details.

This post contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information

7 Tips for Successfully Organising Your Finances

Having well-organized finances is beneficial for a number of reasons. Not only does being organised mean you can enjoy financial independence and have no need to take on any type of debt unnecessarily, it gives you peace of mind and ensures you can have positive thoughts and feelings about money, and use your organized state to save and plan for a bright and exciting future.

One of the great things about financial planning is that you can be organized, successful, and maximise your money whatever you earn, leaving you to enjoy life and focus on the things you enjoy. Here are seven tips for successfully organizing your finances.

Create a Budget

Creating a budget is always the first step for successfully organizing your finances. It may sound daunting now, but it’s easy to do and can make a big difference to how you view your money right away.
You can read our blog on creating and managing a budget for more tips, but the key things you need to do include:

• Calculating your income and expenditure.
• Separating your expenditure into fixed and variable expenses.
• Monitoring your spending so you can tweak your budget to suit your financial goals
• Breaking down your finances into what you need to spend, what you want to spend, and what you want to save.

Once your budget is in place and you’re committed to it, you’ll instantly enjoy a greater degree of control over your finances.

“Creating a budget is always the first step for successfully organizing your finances. It may sound daunting now, but it’s easy to do and can make a big difference to how you view your money right away.”

Make Savings Non-Negotiable

Many people who don’t have savings will use the excuse that they don’t have the money to do so, yet will actually be spending their disposable income on things they don’t really need. If you’re serious about organizing your finances, making savings a fixed, non-negotiable expense similar to your mortgage or other regular bills is worth doing. This ensures you’re always saving and putting money away – even if you don’t have a specific savings goal – and means you’re covered for unexpected expenses or life events, such as needing to undertake emergency home repairs or being made redundant.

Having the equivalent of six months’ income saved is often cited as a good starting point, and means you’re well covered for whatever life throws at you from a financial perspective. If you don’t need the money for emergencies, you’ll at least have a good safety net if you want to leave your job to start a business or take an extended break.

Pay All Your Bills on Time

One of the easiest ways to lose money is to not pay a bill that is subject to a late payment charge if you’re as much as a day late with it. Considering how easy it is to set up direct debits today, there is no reason for this to happen to you. When setting up your direct debit you can ensure you choose a day that suits you and include this within your budget planning to never miss a payment or incur a late payment fee again.

Plan to Avoid Bank Charges

Another often self-inflicted financial problem is not having enough money in the bank to cover a direct debit payment, which gives the double problem of a bank charge as well as a potential late payment fee. An additional bank charge many people simply accept and consider a part of life is interest and other charges related to an overdraft. While an overdraft is a useful and sometimes needed safety net, you should ensure it remains just that at all times.
If you find yourself using your overdraft as essentially a credit facility, look to use the savings you achieve through budgeting to ensure you’re living with your bank balance as zero as much as possible rather than using the additional facility from the bank.

Maintain a Great Credit File

If you pay all your bills on time and do your best to avoid bank charges, then you’re probably already doing a great job of maintaining a great credit file and score. While having a clean file won’t help you save money on a day-to-day basis, it does mean you will be offered better interest rates should you apply for a personal loan or another form of credit such as a mortgage.

You are entitled to free access to your credit report and score and should spend some time ensuring the information held on your credit report is correct.

“While having a clean file won’t help you save money on a day-to-day basis, it does mean you will be offered better interest rates should you apply for a personal loan or another form of credit such as a mortgage.”

Take Advantage of Technology

In the blog post highlighted earlier regarding creating and managing a budget, we speak about using financial apps and Excel templates to make it easy to visualise your financial reality. Another way you can take advantage of technology is to use online banking services and online account management for credit cards and any other personal finance or credit products you use. This means everything will be kept in one place, and if you ‘go paperless’ you save yourself the stress of managing statements and keeping them stored safely at home.

Prioritise Debt Repayments

Prioritising debt repayments can be difficult, particularly if you find yourself trapped in the debt cycle where you’re paying a credit card bill then relying on the same credit card for subsistence, thus building up the bill again. When planning your budget be sure to factor in debt payments and look to use any money savings to pay these off quicker.
Focusing on clearing your debts will:

• Make you feel better
• Give you a feeling of control back over your finances
• Help prevent damage to your credit score beyond any already incurred
• Reward you with a large chunk of your income when you have paid them off in full and now have the disposable finances to use as you please

Organizing Your Finances

By being organized with your finances, you can break out of the debt cycle, ensure you don’t live a pay cheque to pay check existence, and have the confidence to live the life you want. Remember to take a proactive approach to dealing with your finances, and set budgets and goals relative to your personal circumstances and to what you want to achieve.


What you need to know

Constancy Wealth Management is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327 AFSL 232706 and Australian Credit Licence 232706. This information does not take your circumstances into account, so read the relevant disclosure documents and consider what’s right for you. If you acquire an AMP product or service, AMP companies and/or their representatives will receive fees and other benefits, which will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Ask us for more details.

This post contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information

3 Ways to Finance a Home Renovation

A home renovation might be required in order to make necessary ‘running repairs’ to your home, or you might be looking at making changes to enhance your lifestyle or add value to your property with a view to selling it at a later date. Whatever the reason, undertaking a home renovation is a big piece of work, and usually a costly one. On top of that, home renovations are exciting and stressful all at the same time.

By planning your renovation effectively, whether you’re looking at a big job such as building an extension or a smaller project with a few internal works, you will save yourself a lot of time, money, and stress in both the short and the long-term. While the cost of your home renovation will depend on the work you’re looking to have done, you have a number of options available when it comes to financing your home renovation.

Personal Savings

Depending on your personal financial goals, you might have been saving for some time; perhaps even with the specific goal of paying for a home renovation with the money you have saved. Alternatively, you might have simply been saving to ensure financial stability, and be considering using this capital now you’ve decided you need to look at home renovation.
Using your personal savings to pay for a home renovation can be convenient and satisfying in a number of ways, including:

• You feel you’ve earned a reward for all your years of saving
• You have the finance to complete whatever work you want
• You may be able to cover the cost yourself without relying on other sources of finance

At the same time, depending on the home renovations you’re looking to complete, you may wish or be able to combine your savings with another option to ensure you can fully finance the necessary work.

Re-mortgaging Your Home

Releasing finance from your home to pay for further improvements is an option you may wish to explore, and if you have already paid the majority of your mortgage or have built up equity in your property it may well be the most attractive one. The beauty of this option is that you will be able to choose how much finance or equity you wish to release from your property, and if you’re planning to use the renovations to add value ahead of a sale, a financial advisor will help you to calculate how much it is best to release.
Before re-mortgaging you should consider your wider financial situation and ensure you will continue to be able to meet your repayment obligations.

“At the same time, depending on the home renovations you’re looking to complete, you may wish or be able to combine your savings with another option to ensure you can fully finance the necessary work.”

A Personal Loan

Depending on your credit status and the eligibility criteria of lenders, you may be able to finance your renovations with a specialised loan. If you are planning to use a personal loan for home renovations, you should ensure you are clear on how much you wish to borrow, and decide whether you will use some of your own savings alongside the loan to pay for the work. Before applying for a loan it is worth having some quotes for the work you want done, and if possible getting the supplier to guarantee these, so you don’t end up having to find extra money later having already taken out a loan.
Don’t apply to borrow more money than you need, as you may end up paying more back in interest unnecessarily. However, if you are unsure of what you need, or have been unable to attain a guaranteed, fixed quote for the work, check with lenders as to whether you will be able to make an early repayment if possible, and any fees that may be associated with this.

Financing Your Home Renovation

Ensure you carefully explore all the options available to you prior to making any decision around financing your home renovation. You should also consider the outcomes and potential benefits of the work you are looking to undertake, particularly if you are planning to use the renovations to increase the value of your home to sell in the near future.




What you need to know

Constancy Wealth Management is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327 AFSL 232706 and Australian Credit Licence 232706. This information does not take your circumstances into account, so read the relevant disclosure documents and consider what’s right for you. If you acquire an AMP product or service, AMP companies and/or their representatives will receive fees and other benefits, which will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Ask us for more details.

This post contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information

12 Effective Ways to Save Money on a Tight Budget

Overspending is an easy habit to get into, albeit often a difficult one to identify and a harder one to escape from. It may seem disingenuous to say overspending is difficult to identify, as after all you’re always aware that you’re spending money when you go to the shops or buy something new. However, often we do overspend without realising, and are missing the small savings that can quickly add up into a considerable sum of money.

Usually the “small savings” element prevents people looking to save, as on the face of things there isn’t enough of a saving there to justify making a real change. By looking deeper at how you’re spending your money, you can make a real difference to your life, and enjoy significant savings while living on a tight budget.

Here are 12 effective ways to save money that will soon have the savings stacking up in your favour.

1.      Check You’re Getting the Best Deals

Whether utilities like electricity and gas, your mobile phone, home broadband, or anything else, how confident are you that you’re enjoying the best deals available? Take some time to gather any contracts and bills together, then sit down and look at what you’re paying. Even if you’re able to afford your current rates with relative ease, that doesn’t mean there isn’t potential for savings.
Get in touch with all your service providers and discuss the options available for saving money. If you’ve been a customer for an extended period, there will usually be loyalty offers available for you to take advantage of, particularly if you subtly indicate you might be considering taking your custom elsewhere.
As an extension of this, you should look at things you’re paying for that you don’t really need. Netflix and Spotify are great services and fun to use, but do you really need them? Is your child’s monthly subscription to Club Penguin giving you value when they can play other games free?

2.      Turn Everything Off

How many times have you read this piece of advice? Despite there being a wealth of knowledge online about the potential benefits of ensuring electrical items are fully turned off – not left on standby – and even unplugged if possible, many are still guilty of not heeding this advice. If you have two or three televisions in your home, a computer system, and a music system, all left on standby, you could be spending a small fortune on electricity while not even using these!
If this sounds a familiar scenario to describe your home, consider investing in energy saving plugs or adaptors that cut the power when it recognises something isn’t being used or is on standby.

3.      “Winterize” Your Home

Though it depends where in Australia you live, it might be unlikely that sealing up any gaps around doors and windows using draught excluders or other products will mean you can go all winter without switching on the heating, but it will mean you will use the heating less as your home is heated more efficiently. Either invest in the products available in the shops or create your own DIY solutions to ensure you’re not paying for heat that quickly escapes your home.

4.      Buy in Bulk if You Can

Buying in bulk might cost more at the time, but you soon see the savings as you need to purchase less often and your purchases last longer. Whether it’s taking advantage of bulk buying deals at the local supermarket or switching your shopping location to a nearby cash and carry, significant discounts can be enjoyed.

“Buying in bulk might cost more at the time, but you soon see the savings as you need to purchase less often and your purchases last longer.”

Before buying in bulk be sure to consider whether it will really work for you. Buying perishables that expire quickly, for example, isn’t a good idea if there is only two of you and you’ll never use something before it goes off. However, you can always save money buying non-perishable items, whatever your situation, so should take advantage of the products and deals available.

5.      Shop with a List

Shopping without a list is a little like shopping when you’re hungry; you inevitably end up buying things you don’t need, probably overspend, then end up wasting food when you don’t use it and it expires before going in the bin.
The other scenario is that you don’t buy everything you need because of not having a list, then end up spending more money at a nearby convenience store, having takeaway, or eating out. Take a shopping list every time you head to the supermarket, and be sure you’ve covered everything you need up until the next time you plan to shop.

6.      Use Coupons and Price Matching

Whether it’s shopping for groceries, clothes, or anything else, there is usually a saving to be enjoyed if you look hard enough. Instead of blindly heading out to buy things and paying the price on the shelf or on the label, take some time beforehand to research what coupons and price match deals might be available.

7.      Go Vegetarian

Often students will turn vegetarian to save money on the high cost of meat, but it is an option open to everyone at any stage of life. You can choose to ‘go meatless’ completely, or if meat is a large part of your diet and one you don’t wish to totally give up, you can designate meat free nights at home to cut back and see some savings.

8.      Enjoy the Park

Costs of children’s clubs and activities can be prohibitive, particularly in busier urban centres where such services are in high demand and usually very popular. Despite these clubs and activities offering a welcome service and providing excellent engagement for children, much of the time you can do all the same things free in the local park or area of open space. Instead of paying a premium for clubs and activities, get friends who have children together to enjoy meet-ups and your own social occasions filled with sports and other activities for everyone to get involved in.
The same principle applies for yourself if you’re paying out for a gym membership every month. Do you really need it?

9.      Group Deals

Keeping the spirit of community alive following your meet-ups with friends in the park, whether you’re doing things with the kids or on your own, using discount websites and taking advantage of group buying deals is a great way to keep your social life active while also saving money. Many people believe living on a tight budget means waving goodbye to any kind of social life, but this doesn’t have to be the case.

10. Consider How You Travel

Do you drive everywhere and pay out for fuel when it might be cheaper to take the train or the bus? Do you take the train or the bus for relatively short trips when you might be able to walk? Assessing how you travel can make a great difference to your finances but also make you fitter and healthier. If driving is essential, are you getting your fuel at the cheapest possible price, and are you getting the best deal on your vehicle insurance? If you do get the bus or train, are you buying the best advance or season tickets to save you money?

11. Cut Back on Eating Out

When you eat out, food, and drinks even more so, are subject to an extensive mark-up. You should really look to cut back on eating out altogether, but if this is a part of your social life, at least think about how often you do it, and what you buy when you do. Opting to drink water instead of another drink is the easiest way to save money, while choosing larger sharing platters and meal options is also often cost-effective. Another option is to eat out on nights when special deals are available, or at locations offering two meals at a set or discounted price.
Include the cup of coffee you buy on the way to work and the muffin on the way home in this, too. Eliminating these will save you a good sum of money over time.

“When you eat out, food, and drinks even more so, are subject to an extensive mark-up. You should really look to cut back on eating out altogether, but if this is a part of your social life, at least think about how often you do it, and what you buy when you do.”

12. Buy Second Hand

Buying something new and ‘box fresh’ is always a great feeling, but there are always bargains to be found at charity shops, garage sales, and other second hand stores, no matter whether you’re shopping for clothes or a new television for your home. You’ll save a significant amount of money adopting this outlook, and if you’re shopping for clothes, vintage trends and wearing reclaimed garments is all the rage right now anyway.

Saving Money on a Budget

While none of these 12 tips are likely to prove a ‘silver bullet’ for your finances on their own, if you put them all into practice they’ll add up into what could be a significant sum of money, depending on your current spending habits and regular expenditure. Take the time to consider where your finances could be better utilised, and become adept at saving money and managing your budget effectively.


What you need to know

Constancy Wealth Management is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327 AFSL 232706 and Australian Credit Licence 232706. This information does not take your circumstances into account, so read the relevant disclosure documents and consider what’s right for you. If you acquire an AMP product or service, AMP companies and/or their representatives will receive fees and other benefits, which will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Ask us for more details.

This post contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information

How to Solve Financial Shortfalls

Financial shortfalls are not easy to deal with, but finding you have a shortfall when you sit down to plan or create a budget for the first time doesn’t have to see you dragged into a financial black hole, either. While our natural instincts and initial reaction to a financial shortfall may be to look at the short term and look to plug the gap immediately, it is better to take a more considered, longer-term view.

Why Might Financial Shortfalls Occur?

If you are able to identify the reason for your financial shortfall then it may be easy to prevent yourself being in such a situation again. For example, if you’ve simply been over-exuberant with your income or miscalculated your disposable income level, it should be easy to rebalance this in the future by being more careful with what you spend.
However, in other circumstances you might find that your income doesn’t cover all of your essential and otherwise necessary expenses. This could be a consequence of poor planning on your part, or it may be due to yourself or your partner losing or changing jobs, or a change to benefits or other supplementary income you receive.
Depending on the reason for the shortfall, you can deal with this accordingly and ensure your plan and budget effectively to ensure it doesn’t happen again. Here are some potential solutions you can implement.

What Not To Do: Recklessly Cut Expenses

Earlier we touched on the natural instinct to take a short-term view, but this is never a good idea. Often people will cancel direct debits for bills or cancel an insurance policy so they have the money they need now. Unfortunately, the bill still needs to be paid at some point. Depending on what it is, not paying it could affect your credit score, and you never know when you might need insurance for whatever reason. What looks like the easiest expense to cut may well end up costing you in other ways in the long-term.

“Instead of taking a short-term view, sit down, assess all your expenses and look at where savings can potentially be made in the long-term.”

Taking Time to Look at Where You Can Make Savings

Instead of taking a short-term view, sit down, assess all your expenses and look at where savings can potentially be made in the long-term. If you’re in a couple make sure you are both involved as a joint enterprise so one of you doesn’t continue to spend beyond your means. If you’re single you could always enrol a family member or a friend to help you, often a fresh set of eyes and an objective viewpoint can make all the difference.
When you first start this exercise, you will probably find it difficult to identify savings. In reality, with the exception of a few fixed expenses, you will be able to reduce your outgoings for most things. Some of the areas you might be able to reduce your expenditure are:

• On your weekly grocery bill. Can you buy cheaper brands or leave out a treat?
• On clothes shopping. Is your wardrobe filled with things you have worn once or not at all? Think about this the next time you see that dress, pair of jeans, or jacket that catches your eye.
• Could you potentially reduce your mobile phone costs if you’re on a contract?
• Are you getting the best price on your utilities, broadband, and television?
• Instead of cancelling your insurance as a knee-jerk reaction to save, can you negotiate a cheaper premium?

“Instead of taking a short-term view, sit down, assess all your expenses and look at where savings can potentially be made in the long-term.”

Can You Increase Your Income?

While evaluating our expenses is usually the first step to solving a financial shortfall, we can also look at our income and ascertain whether there are any opportunities to increase what we earn. You might decide to ask your boss for a pay rise, but if that feels daunting there’s also the option of looking for a new job, or simply finding a way to generate an additional incremental income, be it by using a hobby in a money making venture or taking on a second job.
Again, you should look to avoid the short-term view, which sees many people selling possessions on eBay or similar websites to meet a shortfall now, when ultimately this doesn’t solve the problem in the long-term.

“You might decide to ask your boss for a pay rise, but if that feels daunting there’s also the option of looking for a new job, or simply finding a way to generate an additional incremental income, be it by using a hobby in a money making venture or taking on a second job.”

Solving Your Financial Shortfalls

By taking a considered approach to your spending, planning well, and carefully balancing the money you spend on things you want rather than need, you will put yourself in a great position to avoid financial shortfalls in the near and medium to long-term future. Take the time you need to plan a budget for yourself and ensure you’re always on a positive financial path.



What you need to know

Constancy Wealth Management is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327 AFSL 232706 and Australian Credit Licence 232706. This information does not take your circumstances into account, so read the relevant disclosure documents and consider what’s right for you. If you acquire an AMP product or service, AMP companies and/or their representatives will receive fees and other benefits, which will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Ask us for more details.

This post contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information

6 Step Guide to Creating a Budget

By budgeting and being smart with your finances, you will be able to control your financial situation with relative ease and enjoy the peace of mind that comes with having a stable monetary foundation.

Here are six steps that will help you create your budget and empower yourself to enjoy a brighter financial future.

1.      Start with a Template

Personal financial management and budgeting often doesn’t work if you’re not writing everything down or saving it somewhere, so the first step is to find a template you can work with. There are some excellent finance and budgeting apps available for smartphones, while you can also download Excel templates already complete with formulas, tables, charts, and graphs to help you visualise where you want to be with your money once you’ve entered the relevant figures.
Choose the template that looks bright and engaging for you, the one with the best reviews, or whichever one you think will work best to help you budget, save, and be smarter with your finances.

2.      Setting Financial Goals

Add purpose to your budget creation process by considering your financial goals. If you don’t currently have financial goals, you may want to think about and set these before you start to come up with a budget plan. Having a working budget template might be a financial goal in itself, so looking at these alongside each other might dovetail nicely for you.

“If you don’t currently have financial goals, you may want to think about and set these before you start to come up with a budget plan.”

3.      Calculating Your Income

You can only budget effectively if you know exactly how much you have to budget with. Work out all of your income – include benefits payments you receive in addition to employment income – and include that of your partner if calculating a joint budget. Usually you will find you can work out income easily enough and it will be the same over a full year, though if you receive any money from work or in benefits on a weekly basis you may need to account for subtle differences as you build up a longer-term picture of your budget.
Don’t fall into the trap of dividing your basic salary by 12 to get your monthly income – remember you have taxes to pay! The last thing you want to do is set a budget and then realise you have a sizeable shortfall as you used an incorrect figure. Don’t assume any budget or employer benefits, either.

4.      Planning the Budget and Calculating Expenses

When budgeting, it is worth breaking down expenses into categories to get a better idea of where you can make changes. For the purposes of this guide, we’re going to separate expenses into two categories, fixed and variable.

Fixed Expenses

Fixed expenses will generally be those that you won’t be able to change and that always stay the same, such as your mortgage, utility bills, and monthly or annual travel tickets. Put anything that you could consider a bill and that stays the same, or only changes periodically, into this category.
If you’re looking to save money then treat this as a fixed expense, too, so it’s a non-negotiable, something you will do every month regardless.

Variable Expenses

Record any other expenditure in this category, such as entertainment, clothing, vehicle fuel, grocery shopping and anything else that may bring a variable cost each month.

Budgeting

With some variable expenses, including vehicle fuel and grocery shopping, you might want to dedicate a certain portion of your income to these each month as a budget within a budget, so to speak. In these cases, you might want to set the budget expenditure for these and include them within your fixed expenses, but ultimately this is down to how you decide managing your finances will work best for you.
You shouldn’t include ‘disposable income’ as any type of expense, as the idea of the budget is to understand what you have left over after all your essential expenses, and hopefully to make you mindful of what you do spend and therefore where you might be able to make savings.
An alternative way to organise your finances is to consider:

• Money you need to spend (Both fixed and variable expenses that are essential)
• Money you want to spend (Variable expenses that come from disposable income)
• Money you want to save

Neither way is necessarily better than the other, just choose the one that will inspire you to stick to your budget and help you appreciate your finances in the best way possible.

5.      Tracking and Tweaking Your Budget

Once you have completed the previous four steps you will be in a position to start tracking your spending and tweaking your budget. If after three months you realise you’re spending what you deem to be too much on clothing or socialising, for example, you can then create a goal or tweak your budget to save more money, or re-allocate this spending elsewhere.
You might also be able to tweak some of your variable costs and reduce them depending on your personal circumstances, again either making a saving or releasing money to enjoy a hobby or spending time with your partner.

“Writing down everything you spend, and what you spend it on, is not just a necessary part of budgeting and tracking your finances effectively, it is hugely powerful in terms of making you think about your spending and how you can save money.”

6.      Conscious Spending & Creating a Budget

Writing down everything you spend, and what you spend it on, is not just a necessary part of budgeting and tracking your finances effectively, it is hugely powerful in terms of making you think about your spending and how you can save money.
Follow these points to practice conscious spending and stay on top of your budget:

• Write down everything you spend, and on what. At the end of the month, go back and assess your spending, and evaluate what you spent that wasn’t an essential expense. Don’t beat yourself up about it, but keep in mind whether you really need to spend that money next time you may want to do so.
• Plan your expenses at least one month in advance, but the further you can plan the better. If your finances are stable then it is easy to duplicate a column on a spreadsheet as far ahead as you wish.
• Look at the ways you can spend less. In our financial goals blog from earlier we give examples of how small savings can quickly add up. Spending a little less on grocery shopping or not buying a coffee on the way into work can make a major difference over time.
• Consider the options for boosting your income, even by a small amount, whether using a hobby to make some additional money or spending time completing surveys in the evening.

Effective Budgeting

By committing to creating and sticking to a budget, you are putting yourself in a position to strengthen your financial circumstances and enjoy a brighter financial future. Use these tips and ideas to create and continually manage your budget and be conscious of your spending, all while working towards achieving your personal financial goals.


What you need to know

Constancy Wealth Management is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327 AFSL 232706 and Australian Credit Licence 232706. This information does not take your circumstances into account, so read the relevant disclosure documents and consider what’s right for you. If you acquire an AMP product or service, AMP companies and/or their representatives will receive fees and other benefits, which will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Ask us for more details.

This post contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information

Budgeting Success Methods

While it is easy to say that budgeting is one way to build towards a brighter financial future, sometimes it is difficult to know where to start, or even how to budget at all. To some, budgeting is simply the practice of sitting down, calculating what comes in, and what goes out, on a monthly basis to understand what is left as disposable income. Some people take it further and look at budgeting not only in terms of ins and outs, but also as an opportunity to question each outgoing and take positive steps to save money.

Here are some methods for budgeting success you might decide to try.

Zero Based Budgeting

Zero-based budgeting is a popular technique used in businesses, particularly when there is a strong focus on cost control. In the business sense, each department within a company is asked to justify its own expenditure and identify how much money it needs for the next period, from which a budget will then be set. While you won’t have different departments at home, you can sit down with your partner and work out what you’ll need to spend on everything, from food and clothes to luxuries like a Netflix subscription or your social life.
Sitting down to do this every month might be quite intense and tiresome, so if your income is consistent and unlikely to change in the next 6-12 months you could feasibly plan up to a year ahead. If your budgeting allows you to pay some outstanding debts off quickly then you can always sit down and refocus your budget each time you clear off a debt.

“In the business sense, each department within a company is asked to justify its own expenditure and identify how much money it needs for the next period, from which a budget will then be set.”

Incremental Budgeting

In business terms, incremental budgeting works by taking the budget from a previous period, looking at what was spent, then adding or removing a percentage based on performance. How can this work on a personal level?
The easiest way to practice incremental budgeting at home is to look at what you spent in the last six months, and look at how you can reduce your spending in each area. If you’ve already started budgeting by aiming to spend less money on your grocery shopping, for example, then you’re already practicing a form of incremental budgeting without realising it. Transfer this approach to how you shop for clothes and everything else you spend money on, and you could quickly find yourself saving a small fortune.

Debt Elimination Budgeting

The principle behind debt elimination budgeting is simple; you budget merely what you need for your essentials, and then use the rest of the money to make additional payments towards your debts. Count your regular debt payments within your regular outgoings, then you can work out how much in additional payments you are able to make. It is up to you how strict you are with debt elimination budgeting for yourself; you can keep a set amount aside within your plan for socialising or other luxuries, set aside a certain additional amounts to pay towards your debts, or take the ‘hard core’ approach and put all of your money towards debt elimination.
If you go for the latter option, this is sometimes termed as survival budgeting. Again, this term originates in the business world, and is used for individuals starting their own company, with the survival budget being what they need to live off in order to keep as much money as possible in a new business during its early days.
As an extension of this, once you are debt free you can continue this approach but instead of aiming for debt elimination you can aim to save instead.

Budgeting for Success

Instead of simply sitting down and working out what is coming in and going out, or using an app to work it out for you, put some positive thought into what you’re looking to achieve through your budgeting, and start making a real difference to your financial life today.



What you need to know

Constancy Wealth Management is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327 AFSL 232706 and Australian Credit Licence 232706. This information does not take your circumstances into account, so read the relevant disclosure documents and consider what’s right for you. If you acquire an AMP product or service, AMP companies and/or their representatives will receive fees and other benefits, which will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Ask us for more details.

This post contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information

What Happens if You Fail to Pay your Loan on Time

When you apply for a loan, part of the credit checking process is effectively the lender assessing your ability to repay. If you have a strong credit history and a high credit score, lenders will probably decide that you are likely to be a good borrower and repay on time, based on how much you are looking to borrow and over what period. One of the benefits of applying for a loan is that you can decide how much you want to apply for and how long you want to pay it back. If your application is accepted, this degree of control means, at least when you take out the loan, you should know you are able to afford the repayments over the specified period.

Anyone can experience financial difficulties, and for a variety of reasons, which may mean you are unable to make some of your repayments on time. What are the consequences of this?

You’ll Hear from Your Creditor

The first thing you can expect to happen if you miss a payment is to receive a call and/or a letter from your creditor. You also may have incurred a charge depending on the terms of your credit agreement. If it is your first missed payment then you will be able to catch up by making the payment right away, along with any additional charge. Your creditor may also seek assurance from you that you will make all future payments on time, and if a payment has been missed due to a lack of a direct debit they may insist one is set up.
If you miss one payment but pay within a few days, this usually won’t be noted on your credit report, though you should still make a point of paying on time.

Paying Two Weeks Later & Damaging Your Credit Score

If your payment is more than two weeks late then a notice will be placed on your credit report, and your credit score will start to be affected. At this point, you will have received correspondence from your creditor on more than one occasion, and you might have even had an escalation letter beyond the standard request for payment. Some creditors will simply remind you that your payment is now overdue, and give you a specified period to catch up before taking further action. Note that if you are given time to pay a late payment will still be recorded on your credit report.

“If your payment is more than two weeks late then a notice will be placed on your credit report, and your credit score will start to be affected.”

Escalation & Default

If you fail to make payment with your creditor your account may then fall into default, this usually occurs when your payment is 60 days late. This is considered a serious financial matter, and having a default on your credit file can lead to difficulties in securing credit for a number of years. As well as sending you a default notice, you may also hear from your creditors’ collections department as they seek what they are owed. The collections department may wish to meet with you face to face to discuss your account, although you are under no obligation to do so and can correspond by telephone or in writing if you wish.
Your default notice will specify a time in which you need to make the necessary repayments and schedule future payments before the matter will escalate further.

Letter of Demand

A letter of demand will be sent following the expiration of the time specified on your default notice. The default notice will usually specify 30 or 60 days to pay, meaning when you receive a letter of demand you will be 90 to 120 days behind with your payment. When creditors reach this stage they will usually be seeking full payment of any outstanding amount. If you are not in a position to pay the full amount, you should still contact the creditor to try to come to a repayment arrangement.

“The default notice will usually specify 30 or 60 days to pay, meaning when you receive a letter of demand you will be 90 to 120 days behind with your payment.”

Court Action & Enforcement

Continuing failure to pay may result in your creditor escalating your account through the courts in order to legally enforce payment. Should you ignore the Statement of Claim from the court or admit to owing the debt, or contest the debt but the court finds in favour of the creditor, then you will need to repay. Whatever a judge decides you owe may include fees and interest from the last repayment due date.
Depending on your actions at this stage, you will at the very least have a court writ on your credit file, though if you still fail to pay the court may apply to have you declared bankrupt.

Missing Payments: It’s not worth it!

When you took out your loan, you did so with good intentions and planned to ensure you always made your repayments on time. If you are now facing financial difficulties and may struggle to make repayments, speak to your creditors to see what options and help they may be able to provide. This seems like an intimidating step, but many are surprised to find that creditors are sympathetic and reasonable when their customers face financial difficulties.
Missing payments and failing to repay your loan can have serious financial consequences both now and in future, and can damage your ability to acquire credit for many years.



What you need to know

Constancy Wealth Management is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327 AFSL 232706 and Australian Credit Licence 232706. This information does not take your circumstances into account, so read the relevant disclosure documents and consider what’s right for you. If you acquire an AMP product or service, AMP companies and/or their representatives will receive fees and other benefits, which will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Ask us for more details.

This post contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information

Will Debt Consolidation Make You Spend More or Less?

There are many questions to ask and things to ponder prior to taking out a debt consolidation solution. One of the major considerations you will need to make involves a potentially big change to your lifestyle, namely taking control of your spending and changing the way you approach financial management.

If you’re at the stage where you’re considering a debt consolidation solution you probably already know what it is and how it works. The big question is the one asked in the title. Will debt consolidation make you spend more or less than you currently do? While the answer is not necessarily a straightforward one, the good thing is it is in your hands.

Using Debt Consolidation

There are three possible scenarios when it comes to using debt consolidation:

1. You use the debt consolidation to clear your existing debts and work towards a more responsible financial outlook.
2. You can use the debt consolidation to free up your access to credit and build up your debts once more.
3. Despite having a debt consolidation solution in place you continue to apply for and use new credit.

While the ideal outcome from debt consolidation is clearly the first scenario, many people do fall into the trap of spending big again. When considering debt consolidation you need to be prepared to take the step from big spender to wise spender. You might be able to make repayments and manage any accounts you open or continue to use while you have a debt consolidation loan, in which case you might need to consider whether such a solution is the right one for you.
Now that we know the possible outcomes of debt consolidation and that ideally you want to spend less, we can look at the strategies that might help you.

‘One of the major considerations you will need to make involves a potentially big change to your lifestyle, namely taking control of your spending and changing the way you approach financial management.”

Budgeting Effectively

If you’ve chosen debt consolidation as an effective debt management strategy, it is likely you have already begun to think about financial planning and budgeting. If not, now is the time to start. Sit down and plan your expenditure and ensure you are in a position where you will not need to rely on credit while paying off your consolidation loan.
If you need help with budgeting or financial planning, contact us today.

Closing Your Accounts

When you take out a debt consolidation loan they will pay your creditors directly so all you need to worry about is making your weekly or fortnightly repayment to us. Once we have done that, if you think you may be tempted to use your access to credit then close your accounts. There is no benefit to be had from having open credit accounts that you’re not going to use, and in some cases, having dormant accounts can even be detrimental to your credit score.
Close any remaining credit accounts while you’re paying off your consolidation loan. When you become better at managing your finances or need access to credit again in the future, you can apply safe in the knowledge that your credit report and history should be in good standing.

“There is no benefit to be had from having open credit accounts that you’re not going to use, and in some cases, having dormant accounts can even be detrimental to your credit score.”

Maintaining Self Discipline

As much as you can budget and close any open credit accounts, in large part managing your finances is going to come down to your own self-discipline. If your credit score means you can’t access credit then in some respects this may represent a positive, as you will be unable to open additional accounts. However, you will still need to manage your spending, and if you do maintain access to credit be very careful about how you use it, if at all.
Debt consolidation can be an excellent solution for those looking to ease debt concerns or simply make managing their finances easier, but whether it works is largely down to you. Make it work for you and you could be on the right track to a brighter financial future, but if you fail to be sensible you could potentially find yourself with debt problems mounting once again.


What you need to know

Constancy Wealth Management is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327 AFSL 232706 and Australian Credit Licence 232706. This information does not take your circumstances into account, so read the relevant disclosure documents and consider what’s right for you. If you acquire an AMP product or service, AMP companies and/or their representatives will receive fees and other benefits, which will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Ask us for more details.

This post contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information

4 Debt Consolidation Traps to Avoid

As the use of credit services and products is today widely accepted as a part of life, millions of people in Australia and around the world hold debt from credit cards, personal loans and various other products. For many, accumulating debt is not a problem, as what they take on is easily manageable and they are able to meet their repayment obligations without trouble. However, financial circumstances can change or people can quickly stack up debt without considering how they will cover their repayment obligations.

Should this happen, debt consolidation can seem like an ideal solution, but if it isn’t done with careful consideration and planning it can make your debt problem worse, or leave you paying more money to clear debts than you would have originally. Debt consolidation is not a debt solution in itself, but is rather part of a process individuals can use to manage their debt more effectively or work towards becoming debt free.

Here are four debt consolidation traps you should look to avoid.

1.      Not Acknowledging You Have a Debt Problem

If you’re looking to use debt consolidation as a short-term, knee-jerk reaction as you start to struggle with your various debts, then you probably haven’t yet acknowledged you have a debt problem at all. Unless you have used your credit services and products for a ‘big ticket’ purchase, your debts will have built up over some time. While financial or personal difficulties may mean you have needed to use credit for subsistence, often debt has built up owing to people living beyond their means and not being careful with their finances.
Speaking to a debt counsellor is a great first step if you are struggling to identify or come to terms with what has caused your debt problem initially. Those who do not acknowledge they have a debt problem will often use a consolidation loan to clear credit card debt then immediately start spending on their credit cards once they have access to the full balance once again, and the debt cycle continues. Some lenders’ terms and conditions for debt consolidation loans will even ask you to acknowledge that you will not apply or accept access to further credit while paying off the loan.

“Speaking to a debt counsellor is a great first step if you are struggling to identify or come to terms with what has caused your debt problem initially.”

2.      Stacking Up New Debt Too Soon

Debt consolidation isn’t just a solution for those struggling to meet their repayments, it might be an option for those that can manage their debts from a financial perspective, but simply want to have one payment or fewer payments to make rather than several. Individuals using debt consolidation for this purpose will often retain their access to credit. This isn’t necessarily a problem, but those doing this should be mindful of spending on their credit cards and using other credit too soon.

“Debt consolidation isn’t just a solution for those struggling to meet their repayments, it might be an option for those that can manage their debts from a financial perspective, but simply want to have one payment or fewer payments to make rather than several.”

From both a financial perspective as well as the potential damage utilising more credit could do to your credit score, it is important to adhere to this point and continue to manage your debt commitments carefully. Try to utilise the mind-set that clear balances do not mean you have a clean slate, and that the debt consolidation loan you have is still a considerable commitment that should be your first priority.

3.      Not Fully Researching Your Options

There are numerous options available to consolidate debt and you should consider them all to ensure you choose the right option for you. The solutions you may be able to utilise include:

• Secured and unsecured personal loans
• Credit card balance transfers.
• Debt management plans.
• Debt negotiations and settlements.

Shopping Around

It is always worth shopping around for the best consolidation terms and considering your options. If you need to, speak with a financial adviser or lenders to help calculate what you can save using each consolidation solution. Once you have considered all options and compared them to what you are currently paying to your range of creditors, you will be in a much better position to assess whether debt consolidation is a worthwhile solution for your circumstances.

What to Consolidate

You should also remember that you don’t necessarily need to consolidate all of your debts. If you have a credit card or a loan that has a great interest rate, you can leave that out of your consolidation plan, only consolidating the debts that you can move to a more competitive, money saving rate. Overall, you need to make sure debt consolidation is really going to make a difference to your financial outlook, and not leave you paying off more over a longer period.

“You should also remember that you don’t necessarily need to consolidate all of your debts. If you have a credit card or a loan that has a great interest rate, you can leave that out of your consolidation plan, only consolidating the debts that you can move to a more competitive, money saving rate.”

Know What You’re Getting Into

The final consideration to make when researching is to beware of all the terms and conditions of whatever consolidation solution you choose. A credit card balance transfer might sound like a perfect solution, but what are your options when the 0% promotional balance ends after 12 months? ‘Get another promotional credit card’ might be the first thing to come to mind, but what if your credit rating has suffered and you can’t get one? Not only should you be sure of what you’re getting into, but if you do utilise balance transfers in this way you should make sure you’re taking advantage of the promotion to pay down as much of the balance as possible while not accruing interest.
Check that debt consolidation loans aren’t subject to penalties or fees if you’re able to repay early, whether the interest rate is fixed or variable, and whether your debt management plan or settlement means creditors will no longer be hassling you for payment.

4.      Not Having a Financial Plan

Alongside not acknowledging you have a debt problem, not having a long-term financial goal is arguably the biggest debt consolidation trap of all. This will likely lead you back into the debt cycle or being unable to apply for and access credit again in the future. It is particularly important to have a robust financial plan in mind if you are using debt consolidation as a means of clearing your debts in full.
Your plan should start from the moment you begin considering consolidation and looking at your options, so that you commit to an affordable repayment plan but one that will also reduce your debts in the quickest possible time. Create a sustainable budget for your lifestyle so that you understand how you can enjoy life and meet your financial needs and obligations without turning back to debt now or in the future. As with the acknowledging of debt, if you are struggling with this step finding a debt and credit counsellor may be of help. Once you get started with your financial planning, you’ll probably find living with a budget and fresh monetary perspective easier than you imagined, and start to enjoy the benefits of a debt free financial future.

“Check that debt consolidation loans aren’t subject to penalties or fees if you’re able to repay early, whether the interest rate is fixed or variable, and whether your debt management plan or settlement means creditors will no longer be hassling you for payment.”

Debt consolidation is a great solution for managing debt, if used correctly. Contact Constancy Wealth Management to discuss your debt consolidation requirements and decide whether this is a suitable credit product for you.

What you need to know

Constancy Wealth Management is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327 AFSL 232706 and Australian Credit Licence 232706. This information does not take your circumstances into account, so read the relevant disclosure documents and consider what’s right for you. If you acquire an AMP product or service, AMP companies and/or their representatives will receive fees and other benefits, which will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Ask us for more details.

This post contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information