5 ways to put your febfast savings to work

Women with CentsBlog, Budgeting, Insurance, Investment, Mortgage, Superannuation

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 mortgage

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.

If you would like to learn more about how to better manage your finances, then check out my book Wonder Woman’s Guide to Money!

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The information provided by Women with Cents is general in nature. It doesn’t take into account your objectives, personal financial situation or needs. Think of it as educational material in which to help you make more-informed decisions. We recommend you obtain financial, tax and credit advice specific to your situation before making any investments or financial decisions.

Sova Financial Pty Ltd Trading as Women with Cents. ABN 71 163 435 836 | Sova Financial is an authorised Credit Representative Number 443432 of Finsure Finance & Insurance Pty Ltd, ACL 384704, ABN 72 068 153 926| Sova Financial is a corporate authorised representative no 468977 of Shartru Wealth Management, AFSL 422409, ABN 46 158 536 871