Effie’s Ten Top Tips
You may have heard that the way we manage money is hereditary – we learn our spending habits from our parents and pass them on to our children. But there are also the rebels who watch their parents struggle with money and are determined to break the cycle. Effie Zahos, “The Money Queen”, watched her parents work tirelessly for little reward in their Greek restaurant. When the restaurant burned down, they were left with nothing.
Effie set out to learn everything she could about money – from a Bachelor of Economics at the University Of Queensland, then a career at Westpac, to TV presenter at The Money Show, and Editor of Money Magazine. After 21 years with the Money franchise, as well as authoring books and countless TV and radio appearances, Effie’s passion for financial literacy helps others to manage their finances and make better decisions around financial products.
Here are Effie’s top tips for women who want to live life to the fullest, whatever they earn!
1. It’s not what you earn, it’s what you spend.
The golden rule (we all know it, but don’t do it!) is to spend less than you earn. It’s easier said than done, especially when events happen in life that lead us to feel we need some retail therapy. Spending can make you feel so good, but if it’s making you get into debt, it’s a bad idea. If you find you have uncontrollable urges to spend (online shopping can be a huge temptation when you’re alone), cut up or lock away your credit card.
2. Start saving now! No matter how small
The sooner you start saving, the more your savings will grow due to the compound interest you earn over time. Each month interest gets added to the balance in your account, so not just on the amount you deposited, but the interest you’ve already earned. The best way to save regularly is to have an automated transfer from your salary (or your everyday account) to your savings account, so you don’t miss money you never had. Even $20 a week can build over time to a significant nest egg. Having a savings goal (a holiday, car, uni, house deposit, etc) will keep you focused and motivated as you watch your progress towards your goal.
3. Don’t be scared by investing
There really are only a handful of options you can invest in – savings accounts, savings bonds, property and equities. There’s nothing mysterious about these asset classes and there is plenty of information available online or at the library. You don’t have to have a lot of money to start investing. Round up accounts (like Raiz) are a great way to get started. Rounding up your purchase amounts puts the extra cents into a share fund, which over time delivers a return to you.
4. Don’t buy in to ‘buying bulk’
It may seem like you are saving money, but just because an item is bigger, doesn’t mean it’s cheaper, especially if you are using a credit card to afford the bulk buy. Supermarkets have to show the ‘per unit’ cost, so be sure you check your bulk purchase is the bargain you expected.
5. Beware of zero % balance transfers
If it seems too good to be true, it probably is. Many cards offering 0% interest have annual fees, balance transfer fees and may not refinance the whole balance. Check also how interest will be applied to future purchases (and if possible keep them separate).
6. Protect your credit rating
If you default on a credit card payment, mortgage or even utilities bill, it can affect your credit rating for life. Check your credit history online before applying for new credit.
7. Don’t be afraid to say no
Peer pressure can lead us to spend more than we earn, especially if our friends earn more! Don’t be afraid to say you can’t afford something, that you are working to a budget or savings goal.
8. Steer clear of “Buy Now Pay Later”?
We live in a world of instant gratification. We see something on Instagram that makes us feel inadequate, but of course there’s a purchase that will solve that inadequacy! Can’t afford the full amount, but the pay later option is so tempting. While afterpay can be cheaper than a credit card, it’s a dangerous trap as it causes us to overspend. It might seem like a small amount now for one item, but come three months time after multiple purchases, how much of your earnings is already committed?
9. There’s never a right time to buy property
Most likely, the best time to buy a property has already passed! If prices are rising higher than you can save, you aren’t winning by waiting. Prices will keep rising, and when your deposit and stamp duty are calculated on a percentage of purchase price, the amount you need to save gets further out of reach. Take advantage of any allowances available to you – such as the First Home Buyer Deposit Scheme
10. Don’t compare yourself to others
Personal finance is personal – what works for one person may not work for you. However, we all learn by being more open about money. Jealous of your friend’s regular shopping sprees? Ask her how she does it – does she have a magic money secret, or a rising amount of debt?
If you love Effie’s tips there are plenty more in her book, A Real Girl’s Guide to Money – From Converse to Louboutins.