Budget app – why do I need one and which one do I choose? 

4 mins read

Budget app: the basics

One of the best ways to help ensure that you’re maintaining good financial health is to set a budget. It sounds too simple to be true — but truthfully, a good budget is one of the best tools in your arsenal for building your financial literacy, helping you establish goals and work towards them. 

Having a clear picture of your income versus your expenses can help you ensure that you’re not overspending. More than that, it can also help you set yourself up for future financial success — once you’ve got a clear picture of where your money is going, you’ll be able to make more informed decisions about where you should be spending, where you can cut back, and how you can save.

We understand you may have been burned by budgets before. Many people’s first experience with a budget is a retroactive one — they sit down with a wealth of paperwork and a calculator and attempt to make it all fit into a spreadsheet. It’s a nightmare that makes many abandon it at the first gate. 

There’s good news though — with a budgeting app, you can avoid the calculator cringe and save yourself a huge amount of work. So let’s take a closer look at what sort of a toolset a good budgeting app should include, to make your life as easy as possible.

Getting the most out of your budget app 

The spreadsheet is dead. You’ve got a powerful smartphone in your pocket, so this is your chance to put it to good use. Whether you’re after a budget app for iOS or a budget app for Android in Australia, there are a plethora of options available. But they’re not all created equally. 

Your budgeting app needs to be able to tell you where your cash is going, and when. But it should also be able to do that in a straightforward, simple fashion. There’s no point in having an app so complex or unintuitive that you can’t be bothered to use it! So here are some key features that you should look for before you smash that download button. 

  • Easy-to-use interface 
  • Ability to connect your bank accounts so you can track expenses and get rich insights on your spending
  • Break your income into specific categories 
  • Surface information about bills and when payments are made
  • Able to export data to a spreadsheet (useful for when you go see your accountant) 
  • Simple and intuitive dashboards and insights for at-a-glance reference
  • Ability to understand and track your net worth
  • Provides insights on any recurring subscriptions you may have

The best free budget app in Australia 

If you’re still unsure which budgeting app is right for you, then we have a suggestion. Here at Humaniti, we think we’ve got the best free budgeting app in Australia. With a huge range of features that make it easy for you to create a budget that matches your needs, secure connections and an intuitive interface, it’s the ideal budgeting app for your needs. So why not sign up today and start setting yourself up for financial freedom? 

Here are some frequently asked questions about Humaiti.

How do I download the Humaniti budget app?

Whether you’re looking for a budget app for iOS or Android, Humaniti has you covered. Available on both the App Store and the Google Play Store, simply download the app from your phone’s App Center and follow the sign-up process. Once you’ve created an account, you will be prompted to connect your financial accounts so that you can power up your financial dashboard and get personalised insights on your spending. When you securely link your accounts, you’ll be able to enjoy a 360° view of your finances.

Is the Humaniti app free?

Humaniti is the best free budget app in Australia that also allows you to make some extra money. Our mission is to help you build a brighter financial future. We help you to improve your financial wellbeing and achieve your savings goals. What’s more, we also allow you to earn money by participating in surveys. We partner with businesses and charities who want to pay you for your opinions. Simply answer our optional surveys, and earn real cash rewards. We’ll deposit rewards into your preferred bank account when you submit a withdrawal. If you’d like, you can also choose to donate survey earnings to charity.

Is the Humaniti app secure?

To be the best free budget app in Australia, we need to ensure that  the privacy and security of your personal and financial data is our number one priority at all times. That remains our focus, and to ensure your information is 100% secure, we employ state-of-the-art encryption technology and work with leading financial services and security partners to ensure the security of your accounts and data. When you connect your accounts, we do not store your bank login details. Information is synced to the app in a read-only manner, so that you can see all your accounts in one place, and build a clearer picture of your net worth and financial position. We undergo security audits on a regular basis. Our staff are also Humaniti app users, so we require the same assurances that you do that our accounts are also safe and secure. 

Does the app offer financial advice?

Humaniti empowers you to take control of your spending with a variety of simple, easy-to-use tools that help you understand where your money is going. However, we do not offer financial advice. Information and insights presented should not be considered as financial advice. Rather, dashboards and information presented can be used to help you manage your personal finances, expenses, and for budget planning. It’s up to you to interpret the information and consider what is important to achieve your financial goals. If you need financial advice, you should seek the services of a licensed financial advisor.

Can I link my bank account to the app?

Yes, you can. Securely link your accounts from more than 200 financial Institutions — including ANZ, Commonwealth Bank, NAB and Westpac — and enjoy detailed summaries of your net worth, cashflow, spending and insights on how your superannuation compares to others. 

When you connect your financial accounts, read-only account connection is established in a highly secure manner via our financial service partners, illion and Basiq. Both partners are leaders in the financial services industry. 

By using the Humaniti budget app on your iOS or Android device, you will also be able to monitor your finances on the go from the convenience of the app. 

Superannuation – what is it and why do I need it?

4 mins read

Superannuation: Understanding the basics

The amount of time spent thinking about and planning for retirement is often linked to how long you have been in the workforce. For those approaching the end of paid employment, it’s probably top of mind, but in the early years of your career, retirement may be too far away to be of much interest. Whatever stage you’re at, the message from financial experts is clear: the earlier you start contributions, the healthier your finances are likely to look down the track.

We’ve put together a collection of frequently asked questions about superannuation to help you get your head around the basics.

 

What is superannuation?

Good question! Superannuation (commonly referred to as ‘super’) is the money contributed by your employer during your working years to help fund your retirement. In the buckets of short- and long-term investing, super fits into the extremely long-term bucket. 

In Australia, how much an employer contributes is set by the superannuation guarantee, legislated and controlled by the federal government. From July  2022, the superannuation guarantee stipulated a minimum of 10.5% of an employee’s ordinary time earnings must be paid into their super fund. Individuals also have the option to make additional contributions on top of the amount paid by their employer.

Why do I need super?

When you reach retirement age and decide to reduce or end your paid employment, you will need an income to live on to ensure you are able to cover the cost of life’s essentials, as well as enjoy the ‘nice to have’ experiences. According to the Australian Bureau of Statistics  (ABS Life Tables 2018-2020), today’s 50 year olds will live around 20-25 years beyond the retirement age of 65 – which means once paid work comes to an end, a new income stream is required. 

Remember, superannuation contributions are your money and the superannuation system is designed to set you up for a more financially comfortable lifestyle in retirement. If you make regular payments into your super fund over your working life, on top of the contributions made by your employer, more money is invested with more potential to grow. 

When the time comes to call it quits as a worker, the money you’ve saved over the years in super will be used as your retirement income. You may also have other income-producing assets such as shares or property. These combined incomes can be used to pay your mortgage (if you still have one), keep your car on the road, cover the cost of private health insurance or fund that long-awaited overseas trip.

When should I start contributing extra funds into super?

As soon as you can!  Any contributions you make on top of your employer’s mandatory contributions are added to your super fund and invested in a range of investments including cash, fixed interest, equities and property. Any returns on these investments of your funds will help grow your super balance. One important note is that as a long term investment, there will be times when your super investment portfolio grows and times when it does the opposite. This is usually not cause for concern as the performance will reflect what’s happening in the broader investment market – similar to the way shares go up and down in value over time.

If you are concerned about the performance of your portfolio, arrange a meeting with your fund manager and discuss your investment options. 

If I want a comfortable retirement, how much will I need?

The amount required for retirement is different for each individual and household as it depends on the current financial circumstances of those involved. Many factors determine how much you will need to save to ensure the retirement lifestyle you desire. 

How much you really need to retire in Australia depends on the shape of your finances at retirement age. As a guide, there are a couple resources that can help you plan for the retirement lifestyle you desire.

The Association of Superannuation Funds of Australia (ASFA) estimates singles will need a minimum of around $46,000 each year to fund a comfortable retirement and couples will need around $65,000 per year. As a lump sum this equates to $545,000 for singles and $640,000 for couples. Super Choice has slightly lower figures at $301,000 for singles and $402,00 for couples with both ASFA and Super Choice estimates assuming the retiree owns their home.

How much should I have at my current stage in life?

If you’re wondering whether or not you’re on track to meeting your retirement savings goal, a retirement calculator will give you a sense based on your age, income, current super balance, employer contributions and other factors. Bear in mind, however, that your situation will change over the years so remember to check how your super is tracking on a regular basis. 

Humaniti can help you get a handle on your overall financial position by providing an up to date view of your net worth. When you securely link your banking, share trading and superannuation accounts and add any other assets and liabilities, you will have a realistic view of your financial state affairs. You will also see how your super balance compares to other Australians like you and be able to monitor how you’re tracking over time. You may decide it’s appropriate to make additional super contributions to help set yourself up for a more comfortable retirement.

 

* Disclaimer – the information in this article is general in nature and does not constitute financial advice. 

Essential features to look for in a personal finance app

3 mins read

Personal Finance App Features

Budgeting is an efficient way to keep track of your individual or household finances and develop healthy financial habits that benefit you in the long run. A personal finance app like Humaniti helps you manage your finances and ensures your financial wellbeing is consistently robust and working in your favour.

But before you sign up for the first app you spot, there is a list of essential personal finance app features that you need to look out for. If the personal finance app ticks all the boxes, it’s definitely a keeper!

Security is king in a personal finance app

A personal finance app typically requires you to connect your financial accounts, so that you can see all your finances in one place and get detailed insights on your spending. This makes security one of the key personal finance app features you should look out for. Check if the app has stringent security practices that ensure the safety of your account and data. 

Data security and user privacy forms the core foundation of the Humaniti personal finance app. We understand that by linking your financial accounts with Humaniti, you are trusting us with your data. Security is our #1 priority. We employ the latest encryption technology and firewalls to protect members’ data. We do not store bank login details, and no transactions can take place on our platform. Unlike other apps, we will never share or use your personal information for marketing purposes.

Connection of your financial accounts is managed in an extremely secure and encrypted manner. Depending on your institution (e.g. Commbank, Westpac, Sun Super, etc), linking will be facilitated using read-only transaction fetching technology provided by either Basiq or Illion. Both Basiq and Illion are leading and accredited Australian financial service providers, with secure connections to over 200 financial institutions in Australia. Their technology is used to power hundreds of fintech and banking applications in Australia –  including Credit Simple, Zip Pay, Wisr, Beforepay, Regional Australia Bank, and others. When you link your accounts, we fetch your account data to show you detailed insights on your personal finances. Data is accessible to us in a read-only format, meaning we can never login to your accounts, or transact on your behalf. 

Humaniti also works with cybersecurity experts to test our systems and to ensure the highest levels of security, so you can safely use our personal finance app.

Other crucial personal finance app features to consider

Besides security, there are several other essential personal finance app features that mark the difference between a mediocre and an excellent personal finance app. An easy-to-use, easy-to-navigate and intuitive interface are key features. If you’re facing difficulties in navigating the app from the get-go, it’s time to hit delete and download another app. 

Next, your personal finance app should have the ability to link all your accounts cohesively so that you have a bird’s eye view of your financial status. Tracking expenses and savings to help you budget your money is an essential personal finance app feature as it makes the tedious task of bookkeeping a breeze. 

A superior personal finance app will allow you to access your super information so you can compare and monitor your funds. Analysing your net worth is a complex task that requires a comprehensive list of your liabilities and assets, such as investments, mortgages and debts. The app should provide you with an instant, easy-to-understand overview of your net worth and help you keep track of it. 

Why Humaniti’s personal finance app is the best on the market

Keeping your specific needs in mind, here at Humaniti, we’ve created what we like to think is more than a personal finance app. Besides the cutting-edge security measures that keep your data private and secure, our app boasts some of the best personal finance app features:

  • The app helps you understand your net worth in an insightful and straightforward manner.
  • You can connect your super account to understand how you compare to other Australians, and to help you plan for retirement.
  • Track your spending and learn where you can save.
  • And unlike others, you can even earn some extra cash by taking part in surveys.
  • Did we mention that it’s free?!

Of course, there are many budgeting apps to choose from and you need to pick the one that’s right for you. With the recent Pocketbook closure, we see Humaniti as a great alternative to Pocketbook.

If you’re ready to start building a brighter financial future, download Humaniti’s personal finance app today. If you have any questions about our app, don’t hesitate to contact us — our expert team would be more than happy to help.

The 50-30-20 budgeting approach

4 mins read

Create your budget plan using the 50/30/20 budgeting approach

Once you have made the decision to create a budget, you might want to consider some of the more popular budget methods to help you get started. When you understand the importance of budgeting, you are on your way to improving your financial future. A simple but powerful budgeting approach is the 50-30-20 method which recommends spending 50% of your after-tax income on needs, 30% on wants, while saving the remaining 20% each month. 

The 50-30-20 technique is easy to follow and can help you achieve your financial goals by effectively managing your finances. Let’s take a closer look at the difference between needs and wants. 

 

Needs, Wants, and Savings

In the context of budgeting, needs are the items or expenses that are essential to your everyday life. The bills that you can legitimately categorise as ‘needs’ include food, healthcare, transport costs and power bills. Spending on these types of items is necessary for you to eat, get to work and keep the lights on.

Wants, on the other hand, are the expenses that make your life comfortable and more enjoyable but are not essential for survival. In other words, expenditure outside your basic needs. Enjoying a meal at a restaurant, taking a holiday or splashing out on the latest gadget may be things you like to spend money on, but you can certainly live without them.

The 20% savings is the contribution you are making to your future. The money you set aside could be for unexpected emergencies or for longer term investments, and either way, your future self will thank you for it.

 

Benefits of the 50/30/20 approach

One way to think about creating a budget is to consider it a plan for long term financial health. When looking after our physical health we aim to establish simple habits to build fitness and strength. Financial health works on a similar principle. Establishing good spending and saving habits through budgeting is a great way to build a healthier financial future. The beauty of the 50-30-20 budget lies in its simplicity.

 

Financial Discipline

The 50-30-20 rule defines spending thresholds and sets a savings target for each month. If too much is being spent on those nice-to-have items (the wants), the 50-30-20 plan will easily identify where to cut back. 

Humaniti can help by providing the details on where your money is going each month. When you securely connect your financial accounts, your spending is automatically categorised to help you better understand your spending, and learn where you can save. You’ll be able to quickly identify any areas where you’re spending too much. Our subscriptions feature is just one handy way Humaniti helps you review your ‘wants’ and decide if they stay or go.

 

Easy-to-follow Approach

Many people associate financial budgeting with complex calculations but the 50-30-20 approach is surprisingly simple. It’s also a great way to immediately tweak your spending habits to get your finances in better shape. When you securely link your accounts using Humaniti’s personal finance and budgeting app, you can easily monitor your spending and redirect funds into savings or expenses as needed.

 

Flexibility

The 50-30-20 budgeting approach acknowledges that we all have the desire to spend our hard-earned income on items and experiences that make us happy. Living a thrifty lifestyle may be a way to fast track better finances, but it’s important to have an element of flexibility with a budget. When a portion of a budget is allocated to ‘wants’, it can help maintain motivation by making room for fun and living life.

 

How to create a Budget using the 50/30/20 budgeting approach

There are four basic steps to create a budget based on the 50-30-20 budget approach: 

 

1. Determine your after-tax income

If you are an employee with a regular income, your take-home monthly salary will most probably be your net income, as taxes are deducted by your employer. If you draw income from additional sources, you should also factor in that income. If you are self-employed, your income may be variable. Deduct all business expenses and taxes from your gross income to calculate your after-tax income figure. By doing this for a broader period (quarterly or half-yearly), you can work out an average monthly amount.

 

2. Allocate your income using the 50/30/20 ratio

After calculating your monthly after-tax income, allocate 50% of that amount to meet your needs including groceries, utilities and rent. Next, allocate 30% on the things you enjoy such as eating out or having a holiday. Finally, put away 20% of your income each month into a savings account. Consider setting up automated transfers to dedicated accounts for needs, wants and savings, aligned to your pay date.

 

3. Track your expenses

Key to this budgeting method is ensuring you track your expenses so that you don’t breach the limits you set in the previous step. You can use the expense tracking features available in a budgeting app like Humaniti to make that process easier. By employing this method, you can identify areas where you are overspending and make necessary adjustments.

Humaniti offers a Link, Learn and Earn approach: Link your financial accounts so you can monitor your expenses in close to real-time, without relying on guesswork. Learn where you are spending by using the automated insights and dashboard. Earn by taking part in surveys, if you choose to do so, which can boost your income.

 

4. Ensure you meet your savings target

Another way you can keep your spending within the limit is to prioritise your savings target as soon as your salary is credited into your account. Consider setting up a dedicated savings account with an automatic withdrawal equivalent to 20% of your monthly salary into that account. The set and forget approach will help you avoid the temptation of dipping into your savings during the month, and shift your focus to managing your needs and wants.

 

Conclusion

Once you understand the 50-30-20 method of budgeting it’s easy to understand why it’s one of the most popular methods. There are no complex calculations and it’s simple to follow.

For anyone who has previously struggled with budgets, this approach may be the one that makes a difference. Consider combining this budgeting technique with a personal finance app like Humaniti to quickly understand your spending, and learn where you can save. Humaniti also offers a range of features that can help take the headache out of managing your finances. By being able to track your net worth, view your income summary, and better understand your super, you will soon be on track to a more informed and ideally brighter financial future.

 

* Disclaimer – the information in this post is general only and does not constitute financial advice. 

5 key steps to budgeting

3 mins read

Create a budget in five simple steps

No matter how modest your financial goals, reaching those key milestones will require discipline – and the easiest way to build discipline is to follow a plan. A budget is simply a plan to help you get a better handle on your finances, and you can create one that suits your personal situation with a few basic steps.

 

1. Determine your income

If you are an employee of a company, the chances are you are paid regularly and your take home salary (after tax) is around the same each month. This is your net monthly income, and the first piece of information you need to create a budget.

If you are self-employed or earning income from a variety of sources, add up all those sources to determine your cumulative income over a full year. If you own a business your income may vary from month to month, so calculate your average income over a full year and divide by 12 to create an average monthly income for budgeting purposes.

Before personal finance apps came along, determining this figure might involve gathering your financial documents, including bank statements, pay slips, investment account statements, and any other record that can help you accurately determine your monthly income. Humaniti can make this process a lot easier. Once you securely link your financial accounts to the app, we do the hard work for you to surface your incoming funds. With your average monthly income accurately calculated, you now have a starting point to budget for your expenses and savings in order to reach your financial objectives.

2. Calculate your expenses

The traditional way of calculating your monthly expenses is to prepare a list of goods and services you pay for to get a rough idea of how much you spend each month. This might include rent payments, mortgage repayments, fuel, insurance payments, utilities, groceries, clothes and dining out. Expenses such as insurance, mortgage and rent are likely to be a fixed amount each month, but you may have to estimate how much you are likely to spend on variable expenses including petrol, dining out and groceries.

When you’re signed up to Humaniti and have linked your savings, superannuation and other finance accounts, the calculations are done for you. The smart logic behind Humaniti’s personal finance app will categorise your spending, identify recurring expenses such as subscriptions, and present a view of spending that is easy to analyse at a detailed level. 

3. Subtract expenses from income

Now we get to the calculation side of planning. Once you have established your average monthly income and worked out your average monthly expenditure, deduct total expenses from total net income. This will immediately tell you if you’re earning enough to cover your expected costs. 

When your income exceeds your expenses, you have a budget surplus. This represents an opportunity to set some funds aside for longer term goals. When your expenses exceed your income, you have a budget deficit and will need to boost your income, reduce your outgoings, or both. With a budget deficit, use the 50-30-20 rule to test if your income is being appropriately allocated: 50% of your income goes towards essential expenses, 30% to your wants, with the remaining 20% of your income is set aside for savings. If you are able to lower your expenses, you will grow your budget surplus and potentially invest any excess savings.

4. Set spending limits

Once you have a clear view of your income and your monthly fixed and variable expenses, you could consider setting spending limits to each category of expenditure. This will prevent you from spending more than you’ve planned and help you build the discipline to keep you on track towards your financial goals.

5. Measure your progress

The last step in setting up your budget is to track your progress to make sure you are building your financial discipline and heading in the right direction. You may consider using a personal finance app like Humaniti to help you do this. Humaniti can help by providing a 360° view of your financial position, and by enabling a clear view of your spending in close to real time. This helps you stay focused in the short term with your budgeting plan and goals, as well as understanding the bigger picture of your personal finances.

If you don’t yet have a personal budget, now is the time to get started. You will quickly get a better understanding of your financial situation, will be set up to save as planned to finance significant purchases, and if needed, cut back on unnecessary debt. By following the five key steps to budgeting, you can create a successful budget for yourself that will help lead you to a brighter financial future.

* Disclaimer – the information in this post is general only and does not constitute financial advice. 

4 ways to stick to your budget

3 mins read

Budget tips to help you stay on track

Setting up a budget is the first important step towards better financial management – now all you need to do is stick to it! There are four specific actions that will help you stay within your budget and on track to achieving your financial goals.

As with any change of behaviour, the first weeks will require discipline until the new financial habits kick in. Humaniti is here to help you stick to your budget and stay on course to achieve financial wellbeing.

 

1. Track and trim your expenditure

One of the main reasons people struggle to keep their expenses under control is the failure to accurately track them. Reviewing your expenses on a regular basis provides a clear picture of the main categories of expenditure and better understanding your expenses.

Humaniti can help simplify this process by doing the work for you. When you securely link your bank accounts, the Humaniti app will automatically categorise your expenditure. Review the main categories of expenditure to understand your spending behaviour and habits and, if necessary, trim non-essential outgoings. Cutting back on small recurring expenses such as an extra coffee each day can add up to a decent saving each month.

2. Reduce your reliance on credit

Credit cards can be tempting to use on discretionary expenses, but it’s easy to overspend and rack up unnecessary debt. By paying in cash or using your debit card you have a better chance of staying within your budget as you can only spend what’s available. The process of paying in cash is also a visual reminder of how much an item actually costs and may act as a deterrent. The added bonus of using cash or debit card means you avoid paying interest on those nice-to-have items. 

When you link your debit and credit accounts with Humaniti, you will be able to track your spending and learn where you can save. The dashboard view of your monthly expenditure puts the numbers front and centre so you can easily monitor your credit card activity. Another benefit of linking all your accounts is the ability to monitor debt and interest charges. With a clear understanding of your debt, you make a critical step towards building a better financial future.

3. Consider automatic deposits

Personal finance experts recommend thinking ahead to help prepare for unexpected expenses, and to finance significant purchases. The idea of setting up emergency and sinking funds is all about keeping a steady balance of savings to avoid future financial shortfalls. 

A great way to ensure you’re saving a portion of your paycheck each month is to establish an automatic deposit into a dedicated emergency fund savings account. With an automated savings plan, your bank will deduct a specified amount on payday – as per your instructions – and divert the funds to your dedicated savings account. Doing this automatically and on a recurring basis removes the temptation to spend beyond your budget.

4. Minimise debt

With the proliferation of ‘buy now pay later’ services, it can be tempting to make purchases without thinking through the financial repercussions. If you need to borrow money to finance a purchase, a simple rule of financial discipline  is to stop and ask yourself if you really need the item right now. Delaying the decision to purchase can help prevent the problem of having to pay for the debt you’ve incurred down the track. Consider paying by cash or debit card and spending your own money rather than borrowing to spend.

Humaniti can help you stick to your budget by surfacing the key information you need to help keep your expenses in check and be more disciplined about unnecessary spending. The more money you can save and invest today, the better your chances of creating a brighter financial future.

* Disclaimer – the information in this post is general only and does not constitute financial advice. 

How much do you need to retire comfortably in Australia?

3 mins read

Setting yourself up for a comfortable retirement 

In the first few years of your career, retirement is probably the furthest thing from your mind – but it’s the best time to be thinking about it. If you want to live comfortably in retirement, planning well ahead is essential. So how much do you really need to retire in Australia? 

To work out the size of your nest egg, imagine the lifestyle you’d like to enjoy when your working days are over. Will you own your home? Drive a late model car? Enjoy an active social life and stay connected with family? The Association of Superannuation Funds of Australia (ASFA) would describe this as a comfortable lifestyle and provides a guide for your super balance at retirement for couples and singles.

The ASFA’s Retirement Standard takes into account a range of costs including the daily essentials of running a home, maintaining a car, private health insurance, social activities and regular travel.

Retirees with lower super balances will be able to cover their daily essentials but may need to trim back some of the ‘nice to have’ lifestyle options such as regular dining out, overseas travel or the latest model car. 

How much do you really need to retire in Australia?

So how much is enough to fund the retirement lifestyle you’re seeking? According to the latest ASFA estimates (March 2022), the minimum annual cost of a comfortable retirement is $46,494 for singles and $65,445 for couples. These estimates are for retirees aged 65-84 who own their homes. As a lump sum, this will mean a retirement nest egg of $545,000 for singles and $640,000 for couples.

Super Consumers of Australia have slightly lower figures, suggesting a lump sum of $301,000 for singles and $402,000 for couples will ensure enough annual income to fund a comfortable retirement. Both organisations base these estimates on the assumption the retiree owns their home.

Lump Sum

Comfortable

Singles

Lump Sum

Comfortable

Couple

Annual Cost

Comfortable

Single

Annual Cost

Comfortable

Couple

ASFA $545,000 $640,000 $46,494 $65,445
Super Consumers Australia $301,000 $402,000 $44,000 $64,000

Know your financial position and net worth

In calculating your own lump sum requirements for retirement, you will need to factor in your current financial position and net worth. This means including any credit card debt, personal loans and the amount owing on your mortgage. Once you have a clear view of your current position you will be able to plan accordingly to ensure you’re on track to meet your desired post-retirement income.

Another consideration is how long you are likely to live after you’ve retired. According to the latest data from the Australian Bureau of Statistics (ABS Life Tables 2018-2020), the average Australian male aged 50 today is expected to live to at least 83 years of age and a female aged 50 today to at least 86 – or around twenty years after retirement age. 

Retirement calculators will estimate how you’re currently tracking based on age, income, current super balance, employer contributions and more. These estimates can be a handy guide to help you decide how you can adjust your contributions, but remember the calculations are a snapshot in time and your circumstances will no doubt change between now and retirement age. Good practice is to regularly check in on how your super is tracking as part of annual budget reviews.

How Humaniti can help

Humaniti’s mission is to help people to get more organised and plan a brighter financial future. By linking your banking, share trading, superannuation accounts and adding your property or any other assets or liabilities you have, Humaniti will provide an up to date view of your net worth. You will be able to see your current superannuation balance and understand your outstanding debt. Having a clearer view of your personal financial position is crucial to budgeting and planning for retirement. 

You will also be able to understand how your super balance compares to other Australians like you. You’ll be able to monitor your net worth and superannuation balance over time. This can help you understand whether making additional super contributions is appropriate to your circumstances. 

As an added benefit, once you have linked your accounts, Humaniti will categorise your spending to give you a clear view of your spending habits and identify any additional opportunities to save. When it comes to enjoying a more comfortable retirement, every additional investment in your super will make a real difference. 

The amount required for retirement is different for each individual and household as it depends on the current financial circumstances of those involved. Many factors determine how much you would need to save to ensure the retirement lifestyle you desire. 

 

* Disclaimer – the information in this post is general only and does not constitute financial advice. 

4 key benefits to saving money for the future

3 mins read

How saving today will brighten your financial future

Think of your savings plan as a roadmap to help you reach a specific financial goal. You may have a major purchase in mind or want to establish a financial contingency plan in the event of unforeseen expenses. Either way, knowing you have the choice of using part of your savings rather than incurring unexpected debt will mean less financial stress.  

When you’re ready to create a savings plan, consider using a well-established budget approach that has been tried and tested over the years, such as the 50-30-20 method. Whatever approach you take, having a savings plan in place has many positive benefits to help you achieve a brighter financial future. Here are four of our favourites:

 

1. Being prepared for irregular expenses

Just when you thought your finances were nicely on track, along comes a surprise expense that throws you off balance. Unexpected, irregular expenses can potentially create a financial headache if you don’t have a pool of savings to draw from. One way to avoid the stress of unanticipated expenses is to set up a sinking fund with a buffer which can be used to cover both planned and unplanned expenses. 

By categorising your transactions, Humaniti can help you understand your expenses in detail so you can discover areas of potential cost saving. One example is our subscription feature which helps to identify recurring payments for publications or entertainment services. You may decide to cancel one or two subscriptions and make some substantial cuts to your regular spending. Small, recurring payments add up to a surprising amount over a 12-month period. 

2. Funding major purchases

Savings plans are most commonly used to cover the cost of large purchases that would otherwise require taking out a loan. The obvious financial benefit is that by avoiding a personal loan, you also avoid paying significant amounts of interest. 

One common major purchase is buying a new car. If you think well ahead and set up a savings plan, you will have time to accumulate the necessary funds. With enough lead time, you may also be able to invest some of your savings short term and earn additional interest. You may even be able to negotiate a better deal by having the cash on hand. Even if you don’t save quite enough to purchase your dream car outright, having a substantially reduced personal loan will mean less interest to pay.

Humaniti can help by providing a clear view of your current financial position to ensure you’re on track with your savings plan and goals as well as understand the bigger picture of your personal finances. Our simple dashboard provides a 360° view of your financial situation which means if you stick to your financial plan, you can watch your savings grow, your debts reduce and your overall net worth increase. 

3. Boosting your retirement savings

A savings plan can help fund your superannuation and contribute to a more comfortable lifestyle in retirement. From time to time, you may consider supplementing your superannuation balance by making additional contributions, and there may be tax benefits for doing so. Start early in planning for a comfortable retirement and you will see a significant impact on the amount of funds you can accumulate over your working life.

By linking your superannuation account to Humaniti, you will gain insights into how your super balance compares to other Australians like you. By keeping a closer eye on your super balance and how it compares, you can decide if allocating additional savings to your superannuation is an appropriate financial decision for your circumstances.

4. Saving for your future home

When you buy a home you will need to make a significant payment up front as a deposit. If you have saved enough funds to cover the deposit, you will reduce the amount you need to borrow and may qualify for lower interest rates. A smaller mortgage will mean less interest over the term of your loan, and you will start your home ownership journey with more equity in your home.

When you securely link your transactional and savings accounts to the Humaniti personal finance app, you will better understand your spending and have a clear view of your savings over time. In addition, if you own a home and have a separate mortgage account which is also linked to Humaniti, you will have an accurate and up-to-date view of your overall net worth. 

There are many upsides to having a savings plan in place, and with your accounts linked to Humaniti, you will be able to track your financial activity against your savings plan. Humaniti will automatically categorise your transactions and provide a 360° view of your finances to help you manage your money and build a brighter financial future.

 

* Disclaimer – the information in this post is general only and does not constitute financial advice. 

Why budgeting is important

2 mins read

Top 5 reasons why personal budget planning is important

The most important step on the path to financial security is creating a budget. Put simply, a budget is a spending plan that will help you live financially within your means. It will put your income to work by allocating what you earn to expenses and savings. 

Most of us think we know where our money is going, but creating a budget takes out the guesswork.  Here are the top five reasons why you should start budgeting today.

 

1. Budgeting helps you manage and minimise debt

When you prepare a budget, allocate a portion of your income to finance the expenses you know are coming so you don’t take on new debt. You may also want to put some of your income to savings which can help you pay off any existing debt. One popular budgeting method is the 50-30-20 approach where 50% of your after-tax income is allocated to needs, 30% to wants, and 20% to savings. When you have the balance right you will start to see both your debt and your savings in better shape.

 

2. Budgeting helps prepare you for emergencies

With an appropriate budgeting plan, you can aim to contribute a certain portion of your income each month towards your emergency fund. In the event of a crisis, having enough money to cover your living expenses for three to six months will help keep you financially sound. Creating a budget and sticking to it will help you bolster your finances for unexpected situations. 

 

3. Budgeting helps you be more disciplined with your spending

It is often said that if you don’t track something, you can’t measure it – and the same is true with our spending. A budget helps you focus on how much you’re spending and in which areas. When you know your budget limits, you will be more disciplined at times when you are tempted to splurge. You may also discover ways to reduce outgoings each month which can bring you closer to achieving your financial goals.

 

4. Budgeting helps build your retirement savings

With your budget in place, you may choose to invest some of the extra funds you are saving into a longer term goal such as superannuation. The bigger your nest egg, the more likely you will enjoy a comfortable lifestyle during your retirement. When you contribute additional money each month to your super fund on top of your employer’s contribution, you can supplement your retirement income.

 

5. Budgeting helps you achieve your financial goals

Whatever your financial goals, your best chance of achieving them is by closely following your budget. Month by month you will see the savings build and before you know it you will have the necessary funds for that overseas holiday, the new car you’ve been dreaming about, or a solid starting point to fund your children’s education. A budget is simply a plan to achieve a brighter financial future and when you stick to the plan, the benefits will come. 

 

Conclusion

At Humaniti, we want to help you create a plan to get a handle on your spending and achieve your financial goals. Your financial health will see a significant improvement once you set a budget and stick to it. Humaniti’s personal finance and budgeting app can help with that first important step of budget planning as well as the ability to easily track where your money is going each month.

 

 

* Disclaimer – the information in this post is general only and does not constitute financial advice. 

 

Learn to Calculate Your Net Worth

4 mins read

Understand and learn to calculate your net worth

What is your net worth?

Simply put, your net worth is what you own less what you owe. Or, in other words, calculate your net worth by summing the value of all your assets and then subtracting the sum of any liabilities you have. E.g. The total value of your house, your car, any savings or funds in your bank account, shares you own and any other assets, LESS any debts – e.g. your credit card debt, mortgage debt, short term loans or any other liabilities.

Just because someone has a high net income, that doesn’t mean that they have a high net worth. They could have a number of liabilities that reduce their net worth.

Who should calculate their net worth

It’s never too early to take the reins of your finances. Figuring out your net worth and closely monitoring it can give you the leg up you need to improve your financial future. You could look at your net worth figure as a report card that helps you evaluate your financial progression and ensure you are trending upwards over time. Anyone committed to achieving their financial goal should regularly calculate their net worth, including:

  • Students
  • Young professionals
  • Parents
  • Middle-aged workers
  • High-income earners
  • Retirees

Why it can help to understand your net worth

To get a better understanding of your personal finances, it’s can be very beneficial to get a solid understanding of your financial position. With a view of your net worth, you’ll understand your baseline and be able to get a better gauge on your current financial position. Better still, once you have your baseline, you’ll be able to track your position over time. Knowing your net worth is vital to:

  • Understand your baseline and learn the true state of your finances.
  • Determine if you have enough savings to cover emergencies.
  • Better understand any debts you need to reduce.
  • Track how you’re progressing over time.
  • Inform your budgeting.

These are only some of the main benefits of calculating your net worth, but those alone  indicate why financial advisors and analysts consistently use this wealth indicator.

How to calculate your personal net worth

There’s no major rocket science to this one. Instead, it requires that you take an inventory of everything you own and everything you owe. Once you’ve collated your list, determine the values of each asset and liability and subtract total liabilities from total assets.

Total assets – total liabilities = Net worth

 

Assets and liabilities to consider when calculating your net worth

When creating an inventory to calculate your net worth, these are some assets and liabilities to include:

Assets:

  • Your savings balance in your savings accounts.
  • The balance in your checking/current accounts.
  • Balances in any retirement accounts you have created.
  • Superannuation balance(s).
  • The market value of your home (if you own one).
  • If you own any investment properties, the market value of the property.
  • The balance of any share investment accounts.
  • The market value of any cryptocurrency, gold, art, jewelry, or any other alternative assets that you own.
  • The value of any transportation assets you own – cars, motor bikes, boats, etc.
  • Value of your ownership stake in any businesses you own, or part own.

Liabilities:

  • The balance of any loan you have (mortgage, car loan, student loan, or any other loan).
  • The value of any cash debt you may have.
  • Any outstanding balance on credit cards.
  • Tax liabilities you may have incurred that are outstanding.
  • Any other debt you may have.

How often should you figure out your net worth?

Depending on your lifestyle, personal situation and financial goals, you might want to calculate your net worth monthly, quarterly or yearly. Both internal and external forces play a role in your net worth, so it is important to calculate your net worth consistently at a rate that suits your circumstances. Recalculating your net worth after incurring a big, once-in-a-lifetime expense that drastically affects this figure should also be considered.

If the process of how to calculate your personal net worth manually seems time-consuming and challenging, let us help you out. Humaniti can do it for you at the click of a finger!

How Humaniti can help

Humaniti’s personal finance and budgeting app can take the hassle out of calculating your net worth and tracking it over time. When you connect your financial accounts, the total values of your assets and liabilities will be automatically populated for you on your dashboard. If you have other assets or liabilities, you can add the values manually. Once all your assets and liabilities have been added, Humaniti will automatically calculate your net worth and track it over time.

Net worth calculator
Your net worth is automatically calculated.

 

Furthermore, Humaniti’s mission is to help you to build a brighter financial future by aiding you in:

  • Understanding how you are spending.
  • Discovering a 360° view of your finances. 
  • Comparing your Super to Australians like you so you can understand if you need to adjust your contributions to plan for a more comfortable retirement. 
  • Tracking your spending and subscriptions.
  • Effortlessly earning extra cash by taking surveys.

Check out this article to learn more about how Humaniti can help you manage your personal finances.

If you are ready to calculate your net worth with minimal effort and take control of your financial future, download Humaniti today and sign up for our services. Have some questions? Read through our FAQs or contact us, and we’ll get back to you as soon as possible.


Disclaimer:

Humaniti is a personal finance and budgeting app, not a financial advise solution.  This article is provided for general information purposes only. Consider seeking independent financial, taxation or other advice from a qualified advisor where you require assistance relating to your unique circumstances.