Achieve Your Dreams (AYD)

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Mastering Your Finances: Budgeting Strategies for Migrants and Expats in Australia

14 May

Mastering Your Finances: Budgeting Strategies for Migrants and Expats in Australia

Achieve Your Dreams, Perth’s pre-eminent coaching service, specialising in budgeting for families, seniors, retirees, migrants, ex pats and small business presents another insight into Budgeting.

I spent most of my career as an accountant in private practice, specialising with small business, and I am now retired. I have done hundreds of budgets, from family budgets to multimillion dollar budgets for SME’s. I was also a qualified Financial Counsellor, and volunteered for St Vinnies – that has now lapsed.

So let’s start:

  1. Understanding the Cost of Living in Australia
    • Cost of living may be very different
    • It may appear more expensive to live in Australia, but wages and income are often higher too
    • Peer pressure – resist at all costs
    • Expectations – keep them real
  2. Essential Budgeting Principles and Tools
    • Essential to have your income and expenses balanced
    • Essential to have a budget – as painful as they may be they will tell you instantly whether you are living within your means, you need extra income or reduce expenses, or a little of both – once you know you can make further decisions. For a family budget to work the whole family must be involved, but be careful not to alarm children, as they may feel the family demise is imminent.
    • Essential to have a savings plan for unexpected expenses
    • The 10 – 20% saving ratio
    • Live to your lifestyle
  3. Maximizing Savings and Minimizing Expenses
    • Invest where you can:
      • You need short, medium and long term investments
      • Pay extra off your mortgage and get a redraw (home owners – short term), high interest bank accounts, index funds (non home owners – short term, but will pay tax), shares, index funds, investment property (medium term – 10 – 15 years), superannuation – (long term – not easily accessible before age 55). Most transaction accounts have almost zero interest.
      • As an example, by paying an extra $10 per month on a $300,000 mortgage at 6.52% interest over 25 years, you can save around $4300 over the 25 years, and paying extra into your mortgage is not taxable.
      • Beware high risk investments – Crypto, businesses you know nothing about, high interest loans – much higher interest than normal, despite what they offer as security –  can be scams, antiques and art, unless you are a respected expert.
    • Save where you can:
      • Ignore ‘sales and specials’, unless you have an immediate use for the item and can afford it – it’s in your budget.
      • Check all small spending amounts – are they essential – they are often under estimated  but add up.
      • Convert weekly spending into annual spending i.e. $10 per week is $520 per year
      • Make use of Lay By’s – most large stores have them.
      • Develop a weekly menu and stick to it – reduce waste
      • Use the internet to find bargains
      • Make use of Op shops, Gumtree, Marketplace etc.
      • Shop around for services you need and get firm quotes
      • Reassess spending on gambling – Lotto tickets, betting, Casino, religious contributions and donations.
      • Get automated payments of your recurring expenses, including paying your credit card by the due date – you can be charged fees for late payments and it can affect your credit rating.
      • Pay off credit card by due date – it’s an expensive source of credit
      • Buy the equivalent of a CBA Wealth Package – reductions in mortgage rates, credit card fees etc. $395 per annum.
      • If you have manageable debt, arrange them by interest rate – highest rate at the top – pay the minimum payment on all and any excess on reducing the highest interest rate debt, and continue down the list until all debt is gone.
      • Try to negotiate with your credit provider for the lowest fees and rates – “I may have to change banks – I’ve been offered lower fees by another provider, or whatever else works for you”
      • Put credit cards in a drawer, do not carry them with you, unless it’s a necessity, and unless you can resist the temptation to spend, cut them up at the first opportunity, and get no fee debit cards.
  4. Building Financial Resilience for the Future
    • Have a long term plan – do not be panicked into making decisions – get advice!
    • Develop budgeting skills and beware of cultural expectations.
    • If you are a couple, delegate financial tracking to the partner who is best at it
    • Accommodation costs are exceptionally high at the moment – this is NOT the norm, but may take several more years to stabilise – discuss with your partner or trusted professional.
    • Understand that rearing children is very costly, but the costs ease once they leave school
    • As you age understand your financial priorities will change
    • Put off expensive purchases and where possible discuss with your partner
    • You don’t need everything new – utilise the 2nd hand market – Gumtree, Marketplace etc., but have an expert on hand especially for 2nd hand car purchases.
    • If you are in serious financial trouble contact a Financial Counsellor – the service is free, they can suggest many options you may not know about – National Debt Hotline 1800 007 007

Good luck, if you need further assistance I can be contacted through this site.