By Bessie Hassan | Money Expert at finder.com.au
Whether you’ve just joined the workforce or you’re thinking of settling down, learning to be frugal with your money is an important life skill and if it’s a skill you’re yet to harness, you should make it a priority.
From asking for a pay rise to negotiating a discount on your Internet bill to comparing mortgage interest rates, there are many ways you can be smarter (and more confident) with your money.
To get the most out of your finances, here are some habits you can adopt to become more frugal.
1. Don’t be afraid to ask for a better deal
In the financial world just about everything is negotiable, so don’t be afraid to ask for a better price. Whether it’s your mortgage, your credit card or even a car purchase, always ask the provider whether they can offer something better.
However, before doing this, do some research to get a feel for the market price so you know what you should be paying. You should also have a think about how you can justify a discount. If you’ve been a loyal customer for 5-10 years, if you have a strong repayment history or if you have a good credit score, you can use this as leverage when negotiating for a more competitive deal.
Recent finder.com.au research found that 82% of borrowers who asked their bank for a better mortgage rate were successful, which goes to show that if you don’t ask you don’t receive. A rate discount of 0.10% could potentially save you thousands of Rand over the life of your home loan, so the reward is certainly worth the effort.
While it may not come naturally to you, negotiating for a better deal (and having the confidence to do so) is an important part of being frugal.
2. Review your accounts regularly
In the same vein as negotiating for a better price, you should also get into the habit of reviewing your financial accounts on a regular basis. This means checking the statements of all your bills and outgoings for things like utilities, Internet, groceries, phone plans, gym memberships, credit cards and loan repayments. Review your accounts to see whether you think you’re being charged a good price.
Regularly reviewing your accounts also gives you a chance to decide whether your they are still meeting your needs. For instance, if you’re constantly exceeding your monthly mobile phone plan allowance, it may be more cost-effective to switch to a plan that includes more data.
Analyse your accounts every 3-4 months to ensure that you’re getting a competitive price and that the product features are complementing your usage.
3. Reduce your debt
Reducing personal debt is an instrumental step in your journey towards better money management. If you have more than one credit card account and you’re falling behind on your repayments, it may be time to consolidate your debt via a balance transfer credit card. These cards allow you to shift your existing credit card debt onto a card that generally has a lower interest rate and fewer fees. Often, a balance transfer card will offer a 0% interest period (some offer this for up to 18 months) so that if you repay your debt during this time, you effectively pay no interest on your balance.
You can also consolidate other debts such as your personal loan and mortgage, but just be careful about combining short-term and long-term debt.
4. Invest your money wisely
If you’ve worked towards reducing your debt, place any surplus cash in a high-interest savings account or a term deposit account. This is a sensible way to up your savings balance as it offers a guaranteed return for minimal risk.
Other ways you can invest are through asset classes such as shares, bonds or property. Like any investment, consider your risk appetite and always consult a professional before investing your funds.
5. Get into good money habits (every bit counts!)
There are many “tricks of the trade” that you can use to be more frugal. Rounding up your mortgage repayments (and making overpayments), using a budgeting app, setting up automatic transfers so you don’t miss a repayment, shopping online for a 5-10% discount and renting out a spare bedroom in your property are just some of the ways that you can take control of your finances.
Life is expensive, but don’t let your finances become a burden. Improve your money management and become more frugal by approaching your finances with confidence, minimising your debt, investing wisely and adopting healthy money habits. Do this, and you’ll put yourself in good stead for whatever the future holds.