Aussie financial milestones (and 5 ways to achieve them)

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seek some clarity on some commonly held financial beliefs

By Bessie Hassan | Money Expert at finder.com.au

Your fellow Aussies believe that owning your own home outright, having a healthy stash of super and being able to take an overseas holiday every year defines the Australian dream, according to new research from finder.com.au, Australia’s most visited comparison website1.

Almost three quarters (74%) of the 2,004 Australians surveyed think that paying off the mortgage is the financial milestone that shows you’re financially set. More than half (59%) think having enough super to retire comfortably is the Australian dream. Going overseas once a year, buying an investment property and being able to retire at age 50 are also telltale signs that you’ve “made it”, especially for Gen Y.

Though these financial milestones may seem out of reach, basic money management skills can give you a tighter grasp on your Australian dream. From simply comparing different products to creating a budget that suits you, being financially set doesn’t have to be difficult if you keep these five tips in mind.

  1. Take care of your personal debt

One of the first things you should keep in mind is your personal debt and how you're managing it. When looking for a new loan it's important to know how much repayments will cost. For existing debts, make sure you set up a direct debit or create repayment reminders so that you don't fall behind.

Another way to stay on top of repayments is to have them all in one place. For example, you apply for a 0% balance transfer product if you have several credit card accounts. By having one account, you can minimise the overall interest you're charged.

  2. Find the right home loan

The majority of Aussies believe being mortgage-free is the top indication of living the Australian dream. Finding the best home loan for you can lead to huge savings in the long run, helping you reach this financial milestone faster.

When looking for a competitive home loan, factors to consider include the interest rate and any fees such as establishment or account-keeping fees. Value for money home loans can offer you lower monthly repayments but consider how flexible they are and whether they will suit your needs. For example, you may find a home loan with a higher interest rate but offers likeable features such as no account-keeping fees.

That being said, these basic home loans can enable you to pay off your loan faster.

  3. Create a budget
The best way to budget is different for everyone. When creating a budget, you should consider the time period, regular and irregular payments, and how things are paid. For instance, if you're paid fortnightly, it might make more sense to create a fortnightly budget rather than a monthly one. You should also factor in what bills are paid every month and what unpredictable expenses such as car maintenance you should plan for. To stay on track, only use cash for areas you usually overspend on such as food.
  4. Start saving early
Once you've created a budget, you can start allocating the money you expected to have left over to your savings. This way, you can make sure you'll be able to afford an overseas holiday and live the Australian dream. Figure out how much you need for your trip and divide that amount across your periods. By saving for an end-of-year trip at the start of the year, you can put your savings into a high-interest account to generate the best returns.
  5. Know which super fund is right for you

If you're building up to financial success and looking to retire with more, finding the right super fund can get you started. However, if you're looking to switch, bear in mind there may be hidden penalties such as exit fees or insurance.

Three things to look at are fees, investment options and performance. Fees can have a big impact on how much superannuation you ultimately receive. You should also be comfortable with the level of risk the superannuation fund offers. Finally, ensure you choose a fund that has consistently been performing well for at lear the past five years.

Living the Australian dream doesn’t have to be just a dream. By starting now, you can make it an achievable goal for your future.

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1Experian Hitwise since 2015