Make no mistake, times are tough! The share market has halved in 12 months, property sales have slumped and unemployment is on the rise…

Whether you are young and trying to get ahead, raising a family and paying off a mortgage, or relying on your superannuation and investments to fund your retirement, more than likely you are being affected in some way by the deteriorating economic conditions.

Regardless of the economic conditions, prudent personal financial management is imperative to achieve your financial objectives.

Here are some tips...
• Create a budget. An effective budget requires you to list all your expenses, the timing of each expense and what you expect to spend for each. The next step is to monitor your expenses to ensure you do not go over your budget.
This has some key benefits –
- You can identify whether you are spending more than you earn.
- Identify areas where spending is excessive and could be reduced.
- Identifies a potential savings capacity and gives you an assurance that if you stick to your budget you will have a lump sum at the end of the year to contribute towards your financial goals.

• Pay off your credit card within the interest free period or risk paying around 18%pa in interest charges. A simple piece of advice that is often overlooked. If you are unable to do this I would recommend either reducing your spending to a manageable level or cut up your card.
• Assuming you have repaid a portion of your mortgage you may consider re-financing your home loan to repay your credit card debt. Given that current home loan rates are around 6.5%pa, an immediate saving of around 11.5%pa can be achieved. If this option is not available, a personal loan could still provide a better outcome.
• Pay off your mortgage as soon as possible. You may be familiar with the terms “good debt” and “bad debt”. Your mortgage is bad debt! It’s a term used to describe debt for which a tax deduction cannot be claimed, hence, there is no financial benefit to having a mortgage, unless you are bank.
On the other hand, if you have debt that is being used to generate an income, you may want to consider an interest only arrangement. This is because a tax deduction can be claimed for the interest, thus reducing your taxable income. For this reason investment loans are often referred to as “good debt”.
• If you are retired and of age pension age, ensure you explore all your options with Centrelink. Being eligible for just $1 of age pension enables you to receive a pensioner concession card which provides many benefits including cheaper medicines.