8 financial resolutions to kick-start 2021

author-avatar By
on January 05, 2021
grow-tip save-tip
8 financial resolutions to kick-start 2021

2020 was a dumpster fire of a year but if anything good came out of COVID, it was that it made many of us more aware of our spending habits.

New research from MyState Bank found that many Australians are embracing the money learnings that arose from the pandemic, and are improving their spending habits.

The bank asked more than 1,000 Australians what their financial resolutions for 2021 were and the overwhelming response was to rein in spending on discretionary items, followed by starting and maintaining a budget. 

MyState Bank General Manager, Customer Experience, Heather McGovern said one of the silver linings to emerge from the pandemic is how it's made people more aware of their spending habits.

"The pandemic has profoundly altered the daily lives of Australians, ushering in a new-found respect for the benefits of savings," Ms McGovern said.

“More consumers are actively questioning their needs versus wants at the checkout, and according to our latest research, aligning their financial behaviour accordingly. It is encouraging to see many Australians seeking out ways to build a financial buffer, whether that is by having a staycation, cooking more at home, or swapping the gym for outdoor exercise.

“We expect these savvy savings habits to continue, with these new behaviours among consumers outliving the recession.”

To start 2021 off on the right foot, here's how to be more money savvy this year.

Need somewhere to store cash and earn interest? The table below features savings accounts with some of the highest interest rates on the market.

Lender

4000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

Savings Account (Amounts < $24k)

    4000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

    High Interest Savings Account (< $250k)

      4001$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

      Online Saver ($1-$100k)

        0500$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

        Reward Saver

          000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

          BU Savings Account

            Rates based on a savings balance of $10,000. Sorted by total interest rates. Refer to providers' websites for bonus rate conditions and for any applicable fees and charges. Rates correct as of May 25, 2022. View disclaimer.

            Start tracking your spending

            Most of us have a general idea where our money goes, like how much you spend on rent and food every week, but I bet there are transactions coming out that you may not even be aware of (oh hey there News Limited subscription I signed up for yonks ago and forgot about).

            Pouring over your bank statements is kind of old school these days, not to mention time-consuming, but there are easier ways to track your spending. Apps like Pocketbook and MoneyBrilliant will sync up with your bank account and automatically track and categorise your expenses for you so you can easily see where your money is going.

            Seeing how much you're spending can be really confronting, but it's often the kick up the butt you need to get your money organised.

            Get on top of your budget

            Don’t have a budget yet? You’re not alone. Over a quarter of Australians don’t have a budget, according to a 2019 survey by MyState Bank, so don’t feel too bad.

            Many of us prefer to wing it when it comes to budgeting and think we can figure out our spending/saving on the fly. Naturally, this approach hardly ever works. If you’ve been tracking your spending, you can easily see where you need to cut down on any expenses, like all those forgotten subscriptions.

            Senior Tax Advocate from CA ANZ Susan Franks said it’s important to set realistic, achievable goals when budgeting.

            “That might be putting $50 away each pay or cutting up the credit card and paying $100 more off your balance each pay,” she said.

            “Split up your financial goals into short-term and long-term. Short-term goals are achievable within six months to a year, and long-term anything longer than a year.

            “It may even help to rename your bank account with the name of your goal such as ‘Holiday’ to inspire you and ensure you think twice before taking money from it.”

            Ms McGovern says the trick to saving money is to be more specific about what you want to save and why.

            "Many of us start the new year with the goal to simply save more money, however, the ambiguity of this goal can see it fall by the wayside after the first few months of the year has passed. Translate your goal from “I want to save more money this year” to “I want to save $5,000 by October.”

            "Science shows many of us are much more likely to be successful in keeping a financial resolution if we have a clear ‘why’ – what’s in it for you. For instance, it is important to know the motivation behind your saying $5,000 – from funding a dream wedding to a dream home."

            We’ve written an in-depth guide on how to budget for more tips.

            Spring clean your subscriptions

            Once you start tracking your spending you can’t help but see all your big money wasters, such as your weekly (or triweekly!) Uber Eats habit. Don’t overlook small transactions either because they all add up. 

            Note to self: cancel that News Limited subscription you never use but you’ve paid $30 a month for all year…

            Dump your debt

            According to MyState Bank, paying off interest-accruing debt is high on Australians' list of new year money resolutions, with one in five planning to pay off their mortgage faster. 

            Meanwhile, 17% of consumers resolved to tackle credit card and personal loan debt.

            Maybe you racked up a whole lotta credit card debt buying Christmas presents or you’ve got a car loan you want to finally pay off. Whatever it is, this is the time to write down all of your debts: what do you owe, who do you owe, what interest rate you’re being charged, and when it’s due.

            Then you want to create a plan to manage the debt.

            “Focusing on the smallest debts can give you a sense of achievement and keep you motivated,” Ms Frank said.

            “Paying off the debt with the highest interest rate or transferring that debt to a lower interest rate may also help you achieve your financial goals more quickly.”

            The longer you hold onto your debt, the more the interest stacks up which eats into the amount you could be saving for other things. Even just contributing an extra $50 to your debt payments every month can save thousands over the life of the debt.

            Have ‘no spend’ days

            From food and alcohol delivery to streaming services and rideshare, it’s so easy to spend money these days without even thinking about it. Try having at least one day a week where you commit to spending nothing - be it cash, debit or credit.

            If that’s too hard, try only spending with cash rather than by card where you can. Physically parting with $50 feels way more painful than mindlessly tapping your card and it will make you think twice before you spend.

            Refinance your home loan

            If you put refinancing in the too hard basket last year, now is the perfect time to do it with interest rates plummeting last year and expected to stay at record lows for three years, according to the Reserve Bank.

            With the lowest official cash rate on record, home loan interest rates well below 2% and very competitive deals on offer, refinancing your home loan should be high on your to-do list.

            The table below displays a selection of variable-rate home loans on offer, featuring a low-rate pick from each of the following three categories: the big four banks, the top 10 customer-owned banks, and the larger non-banks.

            Lender

            Variable
            More details
            UNLIMITED REDRAWSSPECIAL OFFER
            • Fast turnaround times, can meet 30-day settlement
            • For purchase and refinance, min 20% deposit
            • No ongoing or monthly fees, add offset for 0.10%
            UNLIMITED REDRAWSSPECIAL OFFER

            Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

            • Fast turnaround times, can meet 30-day settlement
            • For purchase and refinance, min 20% deposit
            • No ongoing or monthly fees, add offset for 0.10%
            Variable
            More details
            100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
            • No upfront or ongoing fees
            • 100% full offset account
            • Extra repayments + redraw services
            100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

            Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

            • No upfront or ongoing fees
            • 100% full offset account
            • Extra repayments + redraw services
            Variable
            More details
            ZERO APPLICATION FEESFEE FREE OFFSET
            • We lower your rate based off how much you’ve paid down your loan
            • Automatic rate match
            • No upfront or ongoing fees
            ZERO APPLICATION FEESFEE FREE OFFSET

            Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

            • We lower your rate based off how much you’ve paid down your loan
            • Automatic rate match
            • No upfront or ongoing fees
            Variable
            More details
            AN EASY DIGITAL APPLICATION
            • No ongoing fees - None!
            • Unlimited additional repayments
            • Easy online application, find out if you're approved quick!
            • Redraw- Access your additional payments if you need them
            • Use the app to get loan insights to help you pay off your home loan faster
            AN EASY DIGITAL APPLICATION

            Neat Variable Home Loan (Principal and Interest) (LVR < 60%)

            • No ongoing fees - None!
            • Unlimited additional repayments
            • Easy online application, find out if you're approved quick!
            • Redraw- Access your additional payments if you need them
            • Use the app to get loan insights to help you pay off your home loan faster
            Variable
            More details
            NO APPLICATION FEES
            • No ongoing fees - None!
            • Unlimited additional repayments
            • Easy online application, find out if you're approved quick!
            • Redraw- Access your additional payments if you need them
            • Use the app to get loan insights to help you pay off your home loan faster
            NO APPLICATION FEES

            Yard Home Loan (Principal and Interest) (Special) (LVR < 80%)

            • No ongoing fees - None!
            • Unlimited additional repayments
            • Easy online application, find out if you're approved quick!
            • Redraw- Access your additional payments if you need them
            • Use the app to get loan insights to help you pay off your home loan faster
            Variable
            More details
            NO UPFRONT OR ONGOING FEES
            • No ongoing fees - None!
            • Unlimited additional repayments
            • Easy online application, find out if you're approved quick!
            • Redraw- Access your additional payments if you need them
            • Use the app to get loan insights to help you pay off your home loan faster
            NO UPFRONT OR ONGOING FEES

            Owner Occupier Accelerates - Evaporate (LVR 60%-70%) (Principal and Interest)

            • No ongoing fees - None!
            • Unlimited additional repayments
            • Easy online application, find out if you're approved quick!
            • Redraw- Access your additional payments if you need them
            • Use the app to get loan insights to help you pay off your home loan faster
            Variable
            More details
            NO UPFRONT OR ONGOING FEES
            • No ongoing fees - None!
            • Unlimited additional repayments
            • Easy online application, find out if you're approved quick!
            • Redraw- Access your additional payments if you need them
            • Use the app to get loan insights to help you pay off your home loan faster
            NO UPFRONT OR ONGOING FEES

            Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 80%)

            • No ongoing fees - None!
            • Unlimited additional repayments
            • Easy online application, find out if you're approved quick!
            • Redraw- Access your additional payments if you need them
            • Use the app to get loan insights to help you pay off your home loan faster
            Variable
            More details
            UNLIMITED EXTRA REPAYMENTS
            UNLIMITED EXTRA REPAYMENTS

            Basic Home Loan (Principal and Interest) (LVR < 60%)

              Variable
              More details
              EASY DIGITAL APPLICATION
              EASY DIGITAL APPLICATION

              Neat Variable Home Loan (Principal and Interest) (LVR 70%-80%)

                Variable
                More details
                $0 APPLICATION FEE
                $0 APPLICATION FEE

                Budget Home Loan (Principal and Interest) (LVR < 80%)

                  Variable
                  More details
                  100% FULL OFFSET ACCOUNT
                  100% FULL OFFSET ACCOUNT

                  Offset Package Home Loan (Principal and Interest) (LVR < 60%)

                    Variable
                    More details
                    LIMITED TIME OFFER
                    • Fast turnaround times, can meet 30-day settlement
                    • No ongoing or monthly fees, add offset for 0.10%
                    • Extra repayments + redraw services
                    LIMITED TIME OFFER

                    Smart Booster Home Loan Discounted Variable - 1yr

                    • Fast turnaround times, can meet 30-day settlement
                    • No ongoing or monthly fees, add offset for 0.10%
                    • Extra repayments + redraw services

                    Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of May 25, 2022. View disclaimer.

                    Ditch and switch your provider

                    What do you get when you combine summer with high energy prices? An electricity bill large enough to make you weep. How about the current rate you’re paying on your car insurance premium? Don’t feel like you’re getting a good deal on your health insurance anymore?

                    Don’t pay a loyalty tax: take decisive action and make the switch if you feel like your current provider isn’t giving you value for money anymore.

                    Sort out your super

                    The earlier you sort out your super, the better off you’ll be later. This is largely down to the effect of compounding where you basically gain returns on your returns over time.

                    But sorting out your super now means you’re also cutting down on multiple fees and charges. All you have to do is log in to your MyGov account where you can track and manage your super, as well find any lost or unclaimed super. 

                    If you were one of the 3 million Australians who dipped into their super last year under the federal government's early access scheme, it's not too late to get back on track. Here's how to catch up if you've withdrawn your super early.

                    Become more financially literate

                    In the words of Sir Francis Bacon (epic name), knowledge is power. If you don’t know the interest rate on your savings account or what an ETF is, this is the year to arm yourself with information.

                    You don’t need to become an expert on the stock market, but you should know how much interest you’re paying on your home loan or credit card, and when large one-off expenses are due, like your car rego and insurance so you can budget for them.

                    “Information is power. Get the information, write your goals down, be accountable and stick with it,” Ms Frank said.

                    Savings.com.au’s two cents

                    For many people, New Year’s resolutions are nothing more than a meaningless, cliche tradition.

                    But if you’re serious about getting on top of your money, keep your goals simple and realistic to give yourself the best chance of achieving them.


                    Photo by STIL on Unsplash

                    Disclaimers

                    The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

                    Latest Articles

                    author-avatar
                    Emma Duffy is Assistant Editor at Your Mortgage and  Your Investment Property Mag, which are part of the Savings Media Group. In this role, she manages a team of journalists and expert contributors committed to keeping readers informed about the latest home loan and finance news and trends, as well as providing in-depth property guides. She is also a finance journalist at Savings.com.au which she joined shortly after its launch in early 2019. Emma has a Bachelor in Journalism and has been published in several other publications and been featured on radio.

                    Collections:

                    Be Savings smart.
                    Subscribe for free money newsletters.

                    By subscribing you agree
                    to the Savings Privacy Policy