I had an interesting conversation with someone the other night. When I say interesting, I mean to say, I had a conversation that got my back up. And I started to wonder why. At the heart of it was: what is the best way to ‘manage’ your money?
I know the answer is most simple form is ‘whatever is right for you’ – and that is exactly what I feel I’ve done. But these are some of the questions that come to mind.
Why did I fix? Because the rate was significantly less than the variable rate. Because that way I could budget for a fixed period of time (2 years fixed). Because I couldn’t ‘pay more’ than $5k per annum – which was manageable.
Surely you could see the market would drop and rates would fall? Really, can anyone 100% predict the future – and this doesn’t contradict my other responses above
Do I have any? Yes, but ‘not enough’ would probably be the assessment.
My question is: How many’ should I have? What % of my ‘money’ (between the equity in my mortgage and cash savings and shares?)
Why do I have a savings account when it’s effectively ‘negative’? (as you pay tax, and you earn less than inflation. In an offset to a loan, I could be ‘earning’ better money.) Cause cash buys tickets to far off destinations, and that spontaneity and ‘security’ of the cash makes me happy. Selling shares takes some time, admittedly not heaps, but still there’s a ‘cost’ for the transaction. My current loan doesn’t allow redraw or have an offset facility.
Why do you overpay your taxes, wouldn’t you rather the money? No, I prefer lump sums to small amounts every week. AND I hate having bills, so by overpaying I ensure I’m covering any unexpected taxes I might have missed.
Things people (in real life) don’t ask
How much do you have in your ’emergency’ fund? For when I lose my job, but still have things to pay for. Cause NO ONE I know in the real world seems to have considered this, or have actually worked out how much 3 or 6 months of expenses would be. I’m not there yet, but the ‘savings’ is aiming to get there.
How much do you pay to your retirement fund (above the 9% national standard required by employers)? In reality, my employer contributes closer to 12%. And I put in another $50 per week. One day I’ll be baby making, and not earning. Start earn and start small and compound interest in my friend.
What money related questions do you wish you were never asked? What questions do you think people should be asking?