How To Make The Most Of Your Money

"It's such a bargain"

Who doesn't love a discount, even if that half-price pair of shoes is still more than the rent. If you rationalise "marked down, but still over your budget" items as bargains, you're doing what psychologists call "price anchoring". We "anchor" the original price in our mind and compare everything to it; so spending $250 on shoes "worth" $500, even though we can only afford $150, still feels like a bargain.
Solution? "Before you purchase anything ask, 'Do I need this?'" advises financial adviser Bruce Brammall, author of Debt Man Walking (Wrightbooks, $34.95). "Understand the difference between 'need' and 'want'," he continues. "Try to go two or three months of cutting down on 'wants' and you'll be amazed how much you will save." Or, try some time-out - as hard as it is to leave the sales rack, give yourself 24 hours to counteract impulsive buying. It allows the rational side of your brain to kick in: if it still seems a good idea the next day, then buy it.

"I'll sort out my superannuation one day"

When retirement is decades away, it's easy to ignore your super. But getting the right fund - and making voluntary contributions - can make a huge difference. As women often have gaps in their working lives that can affect the end result, we need to think about it now.
If you're under 40, Brammall suggests switching to a more "assertive" option for your fund: going from a "balanced" option to a riskier 85 per cent in shares/property could mean a big difference at retirement. And at any age, try to voluntarily contribute - even just a small amount. Both strategies are about "the power of compounding over decades", explains Brammall. Consider this: a 25 year old who contributes $100 per week for 10 years, and then stops, will have about $109,000 more in super at retirement age than a 35 year old who puts in twice as much ($200 per week) for the same amount of time.

"I've run out of money - but it can go on the credit card"

It's the most obvious equation: for financial success, incomings must exceed outgoings. Yet 30 per cent of households in New South Wales spend more than they earn, and a whopping 25 per cent of us spend more than half our monthly income servicing debt. Overspending "kills most people's finances", states Brammall, and more than half of us have credit card debt. Not only do you feel the pain when you look at your statement, according to Dr Klontz, but overspending is "the source of significant stress and relationship problems, including financial infidelity - lying to our partners about spending - which afflicts 40 per cent of relationships."
Brammall says the only way to fix the problem is to work out where you're leaking money and plan how to cut back - try a free online budget planner. And if you have money in savings, consider using it to repay your credit card debt. What you receive in interest (five or six per cent) is far less than what you're paying for your debt (as much as 20 per cent) - but leave a buffer for emergencies.