Your financial plan doesn't always have to involve massive changes or hard work. Sometimes, simple tweaks can have a huge overall influence. These small changes aren't hacks, but a way of making systems and your own behaviour work for you, rather than against.
One of the ways to do this is by altering your bank account structures.
Why your bank account structures are important for financial planning
Many people don't ever think about their bank accounts once they've been created. As long as they can access their money easily, that's all that matters.
However, your accounts control how you interact with your money which means you can make them into a powerful tool to changing your financial behaviour. Some of the ways your bank accounts can influence your money are by:
Controlling how much interest you earn.
Helping you manage any payments you make.
Making it more difficult to spend your hard earned cash.
Allowing automation to make good decisions easier and save you time.
All of these aspects are core to helping you create and manage a strong financial plan.
Managing your money through your bank account structures
Taking the time to sit down and review your bank account structures, either on your own or with a financial advisor, pays dividends.
Consider what you need from your money and how you currently manage it. Think about the following points:
Does all your income immediately come into your chequing account? While it's useful having your money easily accessible, this doesn't mean it's good for your cashflow. Consider having your pay split, or going directly into your savings with a set amount moved to your daily account each week. This means your money immediately begins earning you interest. It also limits how much you can spend each week before having to physically access your accounts to transfer money.
Do you regularly attract fees? If so, why, and on which accounts? You might find that a different account will better match your needs, and won't incur so many extra and unnecessary charges.
Does your home loan structure suit your needs? Your mortgage is often your biggest expense. As your circumstances change, how you've set up your loan may no longer be optimal for your needs. A financial planner can help you review it and restructure it if that's the best choice for you.
How do you manage your bill payments? Paying bills late or not clearing your credit card before interest is applied can cost you. Where possible create automatic payments to save you from having to remember and possibly incurring fees. Setting up a weekly amount to go against your credit card is also a great way to reduce the chances of extravagant interest accruing.
What debt do you have, and how is it structured? Multiple loans means managing multiple repayments. By consolidating your debt you can make this easier to monitor and handle. There's also the chance that you can save on interest. For example, interest on a mortgage tends to be lower than other types of loan. If you have a home loan, consider asking your bank to add a short term addition to it to incorporate your other debt and make use of the better interest rate.
Here at Money Empire we want to help you achieve your financial goals and grow your legacy. If you want to know more about how we can support you, reach out to our friendly team today.