Six belt-tightening tactics for managing the Coalition’s budget | Women's Agenda

Six belt-tightening tactics for managing the Coalition’s budget

If the budget is passed by the Senate there will undoubtedly be tighter times ahead for many Australians, all in the name of reducing our national debt by $300 billion over the next decade.

Treasurer Joe Hockey says we need to enter what he describes as an “age of opportunity” rather than an “age of austerity”.

Semantics aside, the bottom line is that many Australians will be living on a lot less and some will find it even more of a challenge to make ends meet.

For example, the proposed $7 co-payment to visit a doctor may be tough on people whose budgets are already tight.

At the other end of the spectrum, people on more than $180,000 a year – which accounts for only two per cent of women – will be required to pay a Temporary Budget Repair Levy from July.

Most readers here on Women’s Agenda are economically somewhere in the middle of these two extremes, but that doesn’t mean the pinch won’t be felt.

From August the cost of fuel is likely to rise, with the re-introduction of the twice annual indexation of fuel excise to the Consumer Price Index. Some readers may also be affected by trims to certain family payments.

If you’re a professional woman studying part-time at university you may find your course costs increase as universities will be able to set their own tuition fees from 2016 and the interest payable on HELP loans will rise.

Those born after 1958 face a longer wait for age pension eligibility with those of us born in or before 1965 – that is, readers who are under 50 – not able to receive the pension until age 70 under the proposed changes. That said the average Women’s Agenda reader is likely to be earning enough to self-fund their retirement if they’re being savvy with their planning.

The picture has been painted that all economic levels of society will be paying in some way for the long-term good of the nation. Whether it’s fair or not is another matter and one people will continue to debate.

But one thing Mr Hockey said that certainly is fair and hard to argue with is this: “The days of borrow and spend must come to an end.”

Like it or not, he makes a good point. Recently the ABS released a report, Trends in household debt, which found total household debt stood at $1.84 trillion at the end of 2013.

That is equivalent to $79,000 per person, which is higher than it has been at any time in the previous 25 years. If the Treasurer is right and it really is to the “age of opportunity” here are six tips on how to tighten your belt to help you make the most of the years ahead:

Review statements and seek advice
If you buy most things on card you can quickly figure out what you are spending money on by reviewing your bank statements. It’s not uncommon to find double charges too – so pay close attention. Also review any investment accounts and know what you have in terms of shares, funds, bonds and cash – and if you feel uncertain, don’t hesitate to seek advice to make sure your investments are working for you and your personal situation, goals and timeframe.

Pay down high interest, ‘bad’ debt quickly
Debt to fund an investment is often referred to as ‘good’ debt as the interest is tax deductible, however debt on things like credit cards or your car – not so much. List all debts, how much you owe, to whom and what interest rate you are paying. Focus on paying bad debt down quickest in order of the debt that attracts the highest interest rate first. If you have multiple bad debts, consider consolidating them all into one debt – and shop around for the lowest interest loan possible.

Make the decision today to start living within your means
It’s an old concept but a good one: live within your means. Challenge yourself to do this. For example, if you need a new car or think you will in the coming years, save up for one instead of taking out a loan. Keep track of what you spend on credit and make sure your credit card is paid off in full each month before making more purchases. It can be easy to be lulled into a false sense of economic security when it comes to your credit card. Paying regular attention to your weekly spend can give you a good reality check.

Don’t buy new
Buying second-hand is the new black. Sites like Gumtree allow you to buy things at a fraction of the cost, close to home and often in near-new condition. Get into it and you may begin to wonder why you ever wasted so much money buying new.

Become a minimalist
Do you need to be spending so much on clothes, wine, ? Become aware of how much money you may be wasting. For example, health insurance – what cover do you have and what do you actually need and are likely to use? If you don’t plan on having any more children, for example, make sure you’re not paying for obstetric cover.

Top up your super
Unless you want to still be working at 70 you need a plan to afford to stop work sooner as a self-funded retiree. Your plan may likely include extra payments into your superannuation – and if salary sacrificing is available through your work this is a great way to save pre-taxed dollars.

Claire Esmond is an Authorised Representative of AMP Financial Planning Pty Ltd, ABN 89 051 208 327, AFS Licence No. 232706.

Any advice given is general only and has not taken into account your objectives, financial situation or needs. Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, financial situation and needs.

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