If you are looking for a great opportunity to raise some money for a good cause, improve your health AND boost your bank balance, all in one swift blow, then look no further than febfast!
Febfast is a fundraising initiative by Youth Support & Advocacy Service (YSAS), aimed at supporting disadvantaged young people aged 12-25. To get involved you need to nominate a vice of your choice that you wish to give up for the month – your bank account can offer great insight into what the biggest drain is on your cashflow, but in the meantime here are some suggestions to consider:
- Coffee – Kicking your daily coffee habit would save you an average $150 a month or $1820 a year if you stick with it.
- Alcohol – A popular choice is alcohol, with research finding that Aussies spend an average $138 a month or $1600 a year.
- Sugar – If you have a sweet tooth you can easily spend $5 a day on sugary drinks and desserts, costing you an average $150 a month
- Bought lunches – Bringing your lunch to work could save you $200 a month
- Eating out – according to research by Suncorp, Aussies spend an average $225 a month on dining out.
Assuming your Febfast leaves you with an extra $150 a month back in your pocket, here are some ways you can use that money to grow your wealth.
#1 Boost your super
While retirement may seem like a long way off, research has found that left unattended, many Australians will find themselves retiring with less than enough. This is where small regular contributions can really make a difference. For example, according to superGuru, a 35 year old adding $150 a month into super could boost their balance at retirement by almost $70,000. And depending on your income level, this could also entitle you to an additional $500 a year contribution from the government adding an extra $18,000.
Hot tip: There are many rules that apply when it comes to super, so before you do anything be sure to talk to your accountant or financial adviser.
#2 Pay off your home loan
Your home loan will likely be your largest living expense, yet it is the one most often left on autopilot. With interest rates at historical lows, and the timing of the next rate rise being widely speculated by experts, there has never been a better time to take advantage of the low interest rate environment. While it may not seem like much, paying an extra $150 a month into a $400,000 mortgage on a 3.3% interest rate would save you $32,000 in interest and see you become debt free almost 4 years sooner.
Hot tip: While refinancing can significantly reduce your interest rate, be careful not to reduce your repayment amount, if you want to make the most of it.
#3 Pay off your credit card
Credit card debt can become a real drain on your bank account and keep you treading water as high interest rates easily erode your repayments. This is where every $1 you pay above the minimum repayment amount can really make a difference. For example, on a credit card debt of $20,000 paying off an extra $150 a month would save you between $20,000-$30,000 in interest (depending on your interest rate) and see you become debt free in about 3.5 years as opposed to 40!
Hot tip: While balance transfer cards and debt consolidation can help you boost your repayment timeframe, be careful not to damage your credit score by applying for several loans in a short space of time.
#4 Invest in the share market
Many people make the mistake of not investing early enough. We mistakenly believe that it will require a large sum of cash and so we keep waiting for the day when we have more money at our disposal. However, the beauty of compounding means that you don’t have to invest a lot to be able to grow your money. Assuming an average rate of return of six per cent, if you invest $150 a month into the share market over the next 10 years, you could end up with a cool $25,000 in the bank.
Hot tip: Due to the cost of brokerage fees, try to invest a minimum of $1,000 at a time, or check out micro-investing apps if you are starting with a lower balance.
#5 Get some income protection
According to research by Rice Warner, the vast majority of Australians are underinsured. Research also shows that 1 in 3 Australians are disabled for more than three months during their working life, with the leading causes being musculoskeletal (e.g. a bad back), cancer, depression and anxiety, or heart disease/stroke. $150 a month can go a long way to making sure that you have a financial back up plan, should you happen to be off work for medical reasons.
Hot tip: Life insurance is a notoriously complex area to navigate, so be sure to speak with a financial adviser to get a full understanding of the options available to you.
Natasha Janssens is a Certified Money Coach (CMC)® and founder of Women with Cents. She is an award winning finance expert with a passion for supporting women to transform their relationship with money. If you don't know what you don't know when it comes to money and financial matters, her book Wonder Woman's Guide to Money is for you. If you would like to work with Natasha, take the Money Type Quiz and book a quick get-to-know you call.