How can you tell if one of your friends is on a detox diet?
They’ll tell you.
They’ll take pictures of their mysterious green smoothies, tag themselves at the gym and offer you daily updates on how much water they’re drinking.
You probably already know how a normal detox works (especially after the turkey-, champagne- and chocolate-laden feast that was Christmas and New Years), but do you know how a financial detox works?
Eliminate the toxins
Credit card repayments: What junk food is to the body, interest and fees could be to your budget. On your next payday, consider paying more than you have to against your credit card bill. Taking out these financial toxins could eventually help free up some cash to sink back into budget and future statements.
Another option is to consider refinancing existing debt with a personal loan or credit card that offers low interest rates on balance transfers. When doing so, it’s important to understand the terms and conditions, as well as paying the minimum amount due and balance off in time. There are a number of offers in the market, including tose available through Virgin Money credit cards.
Related: how much interest could you save? Try our balance transfer calculator.
Bad habits: When it comes to the body, taking out the toxins often means giving up all the bad stuff – caffeine, alcohol and fried goodies.
When it comes to the wallet, this means temporarily cutting out some of the bad stuff too – shopping sprees, late-night internet purchases, impulse items you want rather than need, regular dinners out and yes, even cutting the three-a-day cappuccino habit will help too.
Spend time appreciating what you already have. Craft some dinners at home, rediscover the clothes at the back of the wardrobe and opt for walks with friends to catch up instead of dinners and drinks.
Your wallet will soon feel refreshed without all those pesky internet charges, fees and rogue receipts clogging up every pocket.
Be sure to tell people you’re detoxing (tagging yourself in selfies with the latest banking app not required) so they understand why you’re opting for a DVD on the couch rather than heading out to the cinema.
Develop the good habits
During FebFast, a month where participants give up alcohol, sugar or other bad habits, 73% of the alcohol participants were able to reduce their consumption even after the detox was over. A further 82% were more likely to keep a check on their habits, which may be able to apply to a financial detox as well. Money Smart has a range of budgeting and goal-setting applications that you could try in the New Year to get your habit-changing program underway. Once you’ve discovered you are perfectly capable of cutting out poor spending habits completely, you might be able to use that knowledge throughout the year.
Make a habit of checking in regularly with your budget and your balances. In particular, you may want to have a look at your super fund. How much as it grown in the last year? Can you make a one-off contribution to top it up?
A detox traditionally lasts for a week or two, but a financial detox may take a few months as a couple of pay cycles to roll through.
Ask an expert
New Year might also be the perfect time to talk to a financial advisor about your current financial situation and goals. Developing good habits and cutting toxins are great, but a professional financial expert might be able to take your budgeting and investing to the next level.
Now that you’ve cut some toxins, developed some good habits and looked at professional advice, you might find you have more greens in your life this time next year. Greens by the name of Dame Nellie Melba, that is (the lovely lady you’ll find on the back of the Australian $100 note).
Do you plan to undergo a financial detox in the New Year?