Between the uncertainty of life and changing financial demands, the value of financial readiness cannot be overstated. It impacts every aspect of our lives — from our ability to handle emergencies and unforeseen expenses to our mental health and overall well-being. It's about being prepared for the unexpected, managing day-to-day expenses without stress and the security in knowing your financial future is in the green.
But how can you achieve this level of financial security? In this blog post, we’ll define financial readiness and outline four budgeting strategies and tips you can incorporate into your life to stay ready for anything.
What do we mean when we want to be “financially ready”?
Financial readiness, financial stability, financial freedom — if you’ve decided to whip your finances into shape, we’re certain you are bound to have heard one of these terms during your research. But what exactly do they mean? The truth is, there is no one clear definition of what “financial freedom” or “financial readiness” means, as everyone has a different interpretation.
For some people, it can refer to having the power to do whatever you want financially whenever you want, whether that means retiring early, purchasing a new car or even being able to treat yourself to a new pair of shoes just because you feel like it. Of course, to achieve this financial independence, there is some work involved.
At Salt & Lime, we want to empower our customers long after we part ways by providing them with practical and insightful personal finance education so they can continue to work toward attaining financial readiness. So, without further ado, let’s explore four tips to ensure you stay financially ready for anything.
1. Build a strong but realistic budget
Before we can get savvy with how we use our money, we first need to understand where it’s going. The best way to gain this insight is to develop a substantial (but realistic) budget. While there are many “budgeting for dummies” tips, a DIY approach to your monthly budget is typically the easiest and most realistic strategy.
Start by analysing your bank statements over the last three months, noting and categorising where your money goes. This could include everything from groceries to gym memberships, monthly utilities and nights out. Once you’re conscious of how you spend your money, you can pinpoint areas where you can quickly cut back and save.
This simple budgeting strategy allows you to feel more confident with your spending and, by regularly saving, ensures you’re prepared for emergencies — which brings us to our next tip.
2. Set up an emergency fund
While regularly saving is a fantastic way to stay financially prepared, what if you had an account purely dedicated to emergencies? As the name suggests, an emergency fund is a savings account that can only be accessed in an emergency. Life has a tendency to throw us curveballs now and then, and whether it’s an urgent car repair or vet bill, having the ability to cover these costs stress-free with an emergency fund keeps you in the driver's seat of your cash.
Emergency funds can look different for everyone, but a general rule of thumb is to have at least three months' worth of living expenses ready to go — but don’t let this overwhelm you. Start small with one month’s worth and build from there. There is no finish line with financial readiness, just consistency.
3. Work toward becoming debt-free
One easy way to ensure you are financially ready for anything is to clear your personal debt so you can further free up your cash flow. According to research from Finder in 2023, the average Australian has more than $20,000 worth of personal debt. More specifically, the average person has around $1,948 in credit card debt and $6,920 in personal loan debt. If this sounds familiar, there is a way to crush personal debt for good.
For those with multiple types of debt, a debt consolidation loan can give you more flexibility over your repayments and clear the pathway to getting debt-free. This is a loan that combines your multiple debts into one manageable monthly repayment with one interest rate. The debt consolidation loan available at Salt & Lime features no ongoing fees, borrowing terms of up to five years and the opportunity to earn rate discounts. Speak to our team to learn more about our debt consolidation loan.
4. Always remain a student
As we said earlier, there is no finish line with financial readiness, which means it’s important to be open to learning as much as you can in the personal finance education space. As a Salt & Lime customer, you’ll have access to our educational modules, which provide budgeting strategies and other money management tactics you can use long after your loan is paid off.
Our financial well-being hub is also filled with some of the best budgeting tips in Australia, as well as in-depth explainers on topics ranging from credit scores to financial literacy in children.
Begin your journey to financial empowerment with Salt & Lime
Our team at Salt & Lime is here to help you unlock financial freedom to ensure you are equipped for anything life throws your way. We are a personal loan lender, specialising in assisting customers who may have been rejected by traditional lenders or banks. We believe that one’s financial past shouldn’t determine their financial future, and assess all applicants case-by-case to ensure they receive a solution best suited to their financial circumstances.
Explore our educational resources today and take the first step towards financial freedom with Salt & Lime — or contact a member of our team today if you’re interested to learn more about our range of loan options.