Smart strategies for building wealth.

All set to whip your finances into shape in 2017? Use Money magazine’s top five strategies for a thorough fiscal check-up.

1 Know where your money is going. A good budgeting app should do the trick. Pocketbook, available for iOS and Android, is free to download and can help you stay on track with your spending. The app links directly to your bank accounts to create a detailed log of expenses and savings. By categorising your transactions – utilities, groceries, food and so on – the app produces a real-time flow chart to show you exactly where your money is going. You can also use the Safely Spend feature to set dollar limits, to make sure that you stick to a budget. The app will send you a notification if you’re coming close to the limit, so there’s no excuse for overspending. It also recognises when money is coming in, so any interest or dividends earnt will be added to your budget.

2

Have the right home loan. The wrong one can cost you thousands of dollars over the life of the loan. At the time of writing, the cheapest variable-rate home loan sits at

3.35 per cent. And while the cheapest loan may not always be best, it does give you something to compare. Of course, if you’re thinking of refinancing, make sure to do a break-even analysis first. Add up all the costs of moving, including any valuation fees your new lender may charge, and divide this by your monthly savings. This will give you the number of months you need to recoup your costs. If it’s more than, say, one year, can you be certain that your new lender will be just as competitive in 12 months? There’s more to a home loan than just the interest rate. Features such as redraw and offset facilities can help save plenty on interest. 3 Get your credit cards under control. Making only the minimum repayments will get you virtually nowhere. You need to put any extra money you have each week or month towards your debt. A better option may be a balance-transfer credit card. You know the ones, where you pay zero per cent for six months, 12 months, even 18 months. They can be a great way to slash debt if used properly. When comparing offers, be sure to take into account any annual fee charged and/or transfer fees, as these could mean that your zero per cent credit card is not really zero per cent at all. The tip with these cards is to pay them off during the balance-transfer period. If not, you may find that the outstanding debt will attract a high interest rate after the honeymoon period. 4 Take a look at your super fund. How much do you pay in management or performance fees each year? Anything above 1 percent is too much, so if you’re in that boat, hop out. A difference of just one per cent in returns can mean a 20 per-cent difference over 30 years, says the MoneySmart website, run by the Australian Securities & Investment Commission, the financial services regulator. According to the Association of Superannuation Funds of

Australia, the average super balance for someone aged 55 to 59 is $170,393. Reduce it by 20 per cent and that means saying goodbye to more

than $34,000. You should also make sure you’re in a fund that suits your individual situation. If you have plonked your superannuation into your employer’s fund without any research, it may be time to take a closer look. Check a research site such as www.supersavvy.com.au or www.selectingsuper.com.au; they can give you the lowdown on performance and show you exactly how your fund compares in the greater scheme of things. And when you are analysing performance, make sure that you consider the long term.

5

Pay less for the essentials. Too many people stay with the same providers over the years when they could be getting more for their money. Websites such as www.energymadeeasy.gov.au and www. energywatch.com.au are useful for checking whether you are getting the best deal on electricity and gas. For example, Energy Made Easy states that a family of four from Braddon in the ACT could save about $360 per year by switching from the most expensive to the cheapest electricity offer.

There is also a range of alternative electricity plans on the market, such as Powershop, a prepaid electricity provider, and Mojo Power, a provider that offers electricity at wholesale rates. If you’re a big energy user, these services could help you get ahead on your budget. You can also do comparisons for insurance (see www. iselect.com.au and www.comparethemarket.com.au) and phone/internet providers (www. whistleout.com.au is an excellent tool). Sometimes, however, comparison sites may not work to your advantage. If you’re looking for a cheap holiday, research suggests that you might actually be better off calling hotels directly for the cheapest deal. Hotels pay comparison sites large premiums, so there’s a good chance you could beat the cheapest offer by negotiating directly over the phone.