How many of us have “getting finances sorted out” on our to-do list? And how long has it been on the list?
Managing your money can seem like a daunting task, even for the most financially savvy of us. We’ve compiled a list of simple changes you can make to help you take control of your finances. Even if you start with just one or two of these tips, you’ll be on your way financially.
First things first: make sure you understand what health insurance products you need. (Easier said than done, we know!) This will help you avoid paying more than you have to. A couple of basics to keep in mind:
- Hospital coverage and extras coverage are two very different things. You can have one without the other, and even if you choose to have both, you can go with two completely different companies to get the best deal.
- Even if you have hospital insurance, you could still end up paying out-of-pocket costs for surgeries and private hospital stays.
- Hiring coverage for extras will not help you avoid tax penalties. If you have a higher income, you will need to take out hospital coverage so you don’t have to pay additional taxes.
- Most people don’t really get value from their extras coverage. If you only have one dental checkup and a couple of physical therapist appointments a year, you’re probably better off dropping your extra coverage and saving the money.
Small insurers sometimes have better deals.
That’s the basics. What else do you need to know to avoid paying too much for health insurance?
- Private health insurance funds typically raise their premiums on April 1 of each year. However, in 2022, many health funds are delaying their premium increases, including three of the top five funds. NIB will raise your premiums on September 1, Medibank on October 1, and HCF on November 1. Normally we would recommend prepaying your premium on March 31 to lock in the price for next year, but for 2022 you should check with your health insurer.
- Some funds are introducing additional ‘flexible’ coverage. This allows you to tailor your coverage to the services you know you’ll use, so you don’t pay for a lot of things you’ll never claim. This might be an option to consider for people who only use a few services and need coverage for them.
- You can reduce your hospital coverage premium by increasing your deductible. If you don’t plan to have any surgery in the next two years, we suggest you increase your excess hospital coverage to $750 for a single person (or $1,500 for a couple/family) to lower how much you pay for your coverage.
- Don’t get stuck with a big insurer just because you see their name everywhere. Health insurance is regulated and small insurers are just as safe as the big ones and sometimes have the best deals.
- Some funds offer discounts for direct debit payments or prepayment of premiums. Make use of these if you can!
- Shop around for hospital coverage at least once a year to make sure you get the best deal. Some comparison sites only offer information on certain funds. CHOICE has policies from more than 36 health insurers in our health insurance comparison tool.
It’s hard to get excited about super—it can feel too far in the future to worry, especially when you’re just trying to manage week to week. But a few small changes now can really pay off in your retirement. Here’s what our retirement experts at CHOICE recommend.
- Do you have multiple super accounts? That means you’re paying fees on each individual account, rather than just one batch of charges. Gather all your super into one high-yielding account and you’ll grow much faster. You can find out if you have any additional Super Accounts floating around by signing in to myGov.
- Make sure your super fund performs well and doesn’t jack up your fees. You can do this through the ATO super fund comparison tool, which is free and easy to use.
- Check that the insurance you are paying through your supermarket is the right one for you. If you’re not sure, check with your fund by email or post (do not call them). We have a template to ask your fund about the insurance of your supermarket.
- Not sure what you need to do to start planning for your retirement? Check out our retirement planning checklist for free resources.
- How much do you need to retire? We’re developing new guidelines based on how much people actually spend in retirement. Send us your feedback – it will help other Australians plan for retirement.
- Do you want to invest ethically? Don’t choose a fund based solely on its name or general claims; be sure to investigate further. Some funds throw around terms like “ethical,” “sustainable,” and “responsible,” but their investments may not align with their values. From the end of March 2022, new requirements for the disclosure of portfolio holdings will come in, which will make things easier.
- Make sure your death benefit nominations are current and valid; this way, you can be sure that your insurance goes where you want it to. Our guide on where your super goes when you die can help you figure it out. You can also check with your fund.
If you have multiple super accounts, you are paying fees on all of them.
Here at CHOICE, we often refer to the “loyalty penalty”: the price your insurer charges you for staying loyal to them instead of shopping around.
If you’ve been with a particular insurer for a while, shop around for a better deal instead of just automatically renewing your insurance with them. Many insurers offer great deals for new customers to insure their business, so you could save some money by switching providers.
It’s also worth asking your current insurer what you can do to keep your business; If she thinks she might lose him as a customer, he may be prepared to offer her a better deal.
Here’s what our auto insurance expert had to say:
If you choose only insurance to get a bargain (pun intended!), car insurance is it. The policies have a lot more in common than insurers would like you to know, and most insurers are willing to retain or acquire your business. You just need to shop around when your renewal arrives.
Use our auto insurance comparison to review price, as well as coverage for items left in your car (such as laptops and smartphones), and rental car coverage for when your own car has been damaged or stolen. . Also consider whether added extras in auto insurance, like the choice of repairman, will really benefit you.
And a few more car insurance tips:
This is where you need to dive into the details and compare policy features as well as price.
You must first understand if you are in an area prone to natural disasters such as fires or floods. A good insurer will let you know this information. If you are in an area prone to natural disasters, make sure you understand the appropriate level of sum insured to rebuild your property.
Then ask your insurer for more information: Is there coverage in addition to the sum insured if you have to rebuild your house to higher standards? What happens if the price of rebuilding and rent for a property increases while you’re waiting for your home to be rebuilt? Will the insurer cover that in addition to the sum insured? All of these items can be compared in our home insurance comparison.
If you don’t live in an area prone to natural disasters, or if you’re in an apartment block, take a good look at your contents insurance because there’s a lot of variation in contents coverage.
- Look in the cube budget. It is not a new concept, but it is tried and tested. The idea is to allocate and divert certain percentages of funds for daily needs and longer-term savings. A 60:20:20 split is one way to do it. So 60% of your income goes towards things we need like housing, food, fuel, transportation and bills. Then 20% can go toward discretionary spending, aka your wants (fun stuff!). And then try to save 10 to 20% of your income. The important thing is to separate your daily expenses from your savings.
- Find a high-interest savings account that has low fees and set up an automatic transfer so that 10-20% of your income goes directly into your savings account every time you get paid.
- Think of what you owe in terms of ‘good debt’ and ‘bad debt’. Good debt improves your well-being over time, like a mortgage or student loan (as long as you can sustainably repay it). Bad debts are those that are difficult to pay and do not improve your financial well-being, such as personal loans or credit cards. It’s up to you how to prioritize what to tackle first. Maybe the debt with the highest interest rate, or maybe the smallest debts so you feel like you’re accomplishing something.
- If you want help with a financial strategy, talking to a financial advisor is a great way to go. Financial advisors can help you solve your debt problems. You can contact a financial adviser through your bank or the National Debt Helpline (1800 007 007).
- The ASIC MoneySmart website has many tools and calculators to help you get your finances back on track. It’s all free and run by the government, so it’s not trying to sell you anything. The simple money management tool is a great way to get a detailed snapshot of your spending patterns.
- If you’re trying to save or budget, you can try using cash. First of all, it’s easier to keep track of your spending, especially if you withdraw a fixed amount at the beginning of the week, knowing that that’s your target weekly budget. Second, using cash focuses your mind on whether or not you really need something. Tapping a card is effortless and can almost make things feel “free.” Using cash leaves you in no doubt about the money you are spending.