We all like to think we can pick a great deal from a dud. But when it comes to money matters that’s not always the case.
As a guide, only two out of five Australians feel confident enough to choose the home loan that’s right for their situation. Yet a home loan is typically the single largest financial product we’ll ever use.
A shortfall in financial literacy can also impact the choices we make with our money.
The majority of us don’t set a weekly or monthly spending budget. That makes it challenging to keep cash under control, and one in ten households admit to spending more than they earn each month.
Just as worrying, 51 per cent of Australians are clueless about basic cyber security practices that help to keep our identity – and our money – safe online. It could go a long way to explaining why Australians collectively lost nearly $300 million to scams last year alone.
Knowledge is strength
Having some key money management skills under our belt isn’t a matter of impressing mates or family members. Financial literacy gives us the tools and insights needed to make smart choices. And that can go a long way to boosting personal confidence about the future.
Simple skills like knowing what to look for when comparing home loans, credit cards or personal loans helps us narrow down the best deal with the potential to pocket big savings on fees and interest charges.
Using a personal budget planner is a critical step to avoid living from pay day to pay day. With better cash control comes the ability to build savings for emergencies and even investing.
Perhaps most importantly, money management skills help us recognise when an offer is ‘too good to be true’ to avoid becoming a victim of the latest scam.
Room for improvement
None of us like to admit we could brush up on money matters. But in an ever-changing and increasingly complex financial environment there is always room for improvement.
The good news is that there is a feast of free, high quality information available to boost your money mind-power.
Among the options worth checking out is the Federal Government’s MoneySmart website and ME’s online school of money, ed.
Make a commitment
At the very least, make a commitment to reviewing your banking products annually in the same way you cast an eye over your electricity or mobile phone contract. And be prepared to switch if you’re not getting a good deal. It’s easy once you know how.
The bottom line is that we make financial choices every day. Acting on a hunch or a guess can be an easy way to end up paying more than necessary. The best decisions are based on facts, and understanding how to better manage your money can see you regain control of your finances and enjoy a brighter fiscal future.
Members Equity Bank Limited ABN 56 070 887 679.