Wealth Connexions takes the guesswork out of financial planning and answers all of your burning questions
Managing and understanding finance can be confusing, frustrating, and mentally exhausting. At Wealth Connexions we strive to support our clients by not only organising their finances but also by educating them on any questions or areas of confusion they may have. Knowledge is so important, especially when it comes to financing. In the following article, we’ve outlined some popular questions that Australian’s have about money so that you can be better educated and confident when choosing how to use your cash.
What is credit?
We often hear about banks discussing credit, especially when an individual is hoping to borrow a large sum of money, such as a mortgage. Credit is like the receipt of your finances; it tells the bank if you pay your bills on time and consistently. In short, a credit report allows the bank to decide on whether you’re trustworthy enough to repay your loan. If you keep up with your bills and you’re not drowning in debt (especially on your credit card), then it’s likely that you have a good credit score, which will, in turn, positively impact how the bank looks at you as a customer.
Your information, such as your bill and credit card repayments, are given to credit bureaus who then make your individual credit report. You may check your report for free once a year through the federal government, though you may need the assistance of a financial planner in Brisbane, to read and understand what the report is actually saying.
What is a budget?
A financial budget is the organisation of income that is fitted into categories, to ensure your money isn’t being wasted, which could potentially cause strife if you have no emergency savings. A budget is typically broken into the following categories: food, entertainment, transport, rent, and other household supplies. If you’re unsure of where to start with creating a budget, you could always seek the advice of a financial planner in Brisbane. However, we’ll give you a brief breakdown.
Firstly, begin with your weekly/fortnightly/monthly income and work backwards. How much do you expect to spend on food? How much would you preferably want to spend on entertainment or transport? By organising this data, you can figure out if you really need to be spending this much money in these categories, or if you can find solutions to lower these costs.
By lowering the costs of each category, even slightly, you’ll have more money in the bank, which will allow you to save up for that holiday, retirement, or emergency savings. At Wealth Connexions, our financial planners in Brisbane would love to assist you in creating a budget that best suits you.
How much money should be placed into an emergency fund?
An emergency fund is an excellent way for covering those inescapable accidents, such as a car crash, home damage or theft. An emergency fund should have at least one month of bills, food and transport sitting in an account. It’s foolish to think that accidents won’t happen to you, which is why emergency funds need to be put into place to ensure that you won’t be as heavily impacted. With some low incomes, creating a healthy emergency fund can be difficult.
At Wealth Connexions, we acknowledge this. You may begin the fund by placing only $5 a week into the account or putting other money that’s sitting elsewhere into it also. Before you know it, you’ll have an amazing sum of money that will get you out of some tricky situations.