What are the best free online financial literacy resources for Australians?

I have no doubt that I will update this post (or make a new one as more useful resources come up) and also post some of these links on the left sidebar under “Finance Favourites”.

The purpose of this post is to provide the best free finance resources available to Australians. There is a lot of questionable material floating around the internet and it’s easy to get confused. There are also caveats to some of the materials available and I will try to go through as many of them as possible. Please note that I might not necessarily list all of the possible resources, because there are many and I’d be here forever.

Personal Finance

First and foremost, I will list the website that everyone should use. Funnily enough, this is a government-owned website – MoneySmart. This is an incredibly useful resource and can help you understand many of the financial products available. It can even help you get started on planning your retirement. They even put up recent scams – definitely check it out.

Tax

If you’re interested in matters of taxation, you should check out the Australian Taxation Office (ATO) website. This has plenty of free resources which will help you get involved in matters of taxation, super, business and more. There are a few helpful calculators on there as well such as the Simple and Comprehensive tax calculator. You should use these to estimate your tax.

Business & tracking down dodgy scammers

If you’re dealing with someone who you suspect to be dodgy, you can always check to see if they’re a registered business using the Australian Business Register here. This doesn’t just apply to finance, but any business. You can also follow the prompts to get started on registering your own business.

Speaking of business, you should be aware of the fact that an Australian Business Name is different to an Australian Business Name. The ABR is for ABN’s (numbers). You can also use ASIC to search for Australian Business Names and the entities behind them. This can help track down scammers and save you money when dealing with dodgy companies.

Mortgage brokers

I will touch on mortgage brokers in a later post, but if you are going to go ahead and use a mortgage broker, you should always ensure that they are registered with one of the two bodies – MFAA and FBAA. The major difference between these two bodies is that the MFAA requires a Diploma of Finance, whereas the FBAA requires a Certificate 4 for membership. This might change, but I still think that an MFAA broker cares more about their business because it’s more difficult to become accredited with them.

Note: whether you use a FBAA or MFAA broker, you’ll still more likely get a less biased opinion than that of a banker. Just make sure they’re registered.

Online lending calculators from the major banks

You can go ahead and use any of the major bank’s calculators. Sometimes they’ll tell you the assumptions that they use and other times they won’t. If you notice differences between different banks’ calculator results, this is because your borrowing power might be different between Bank A and Bank B. Why is this? Different banks have different risk appetites and lending criteria. So go ahead and use them for access to multiple banks.

Why you should never pay fees for your transactional personal banking.

I could talk about business banking, but I think that many people are more concerned about their personal banking. Further, I am incredibly concerned about the fact that people actually pay money to keep their transactional accounts.

Let’s just think about it for a second. Banks are businesses. Businesses are there to make money. It only makes sense that banks will try and make as much money as they can, so it’s important for us consumers to be aware of what we should and shouldn’t be paying for.

If you have a bank account, are you technically paying for that service? Yes, even if you just deposit money into a basic transaction account, you are technically paying. Why do I say that? I say that because if the bank is not paying you a high interest rate (and I use the word “high” loosely here, but I mean the same rate as that of a savings account, currently around 2-3.5%), then the bank is at an advantage. They get to hold onto your funds and use them behind the scenes whilst your money sits there and does nothing.

The truth is, most everyday banking and transactional accounts in Australia are designed so that no interest is generated. Wealthy people often like this as this means that their tax returns aren’t complicated by yet another item to consider as income.

However for the lay person, there is no reason none at all – to be paying any fees related to your personal transactional banking. How do I know this? I know this because there are free bank accounts out there. I know that there are absolutely despicable banks charging fees for all sorts of things, stealing your hard-earned money for things like when a direct debit bounces. Why does the direct debit often bounce? Because you don’t have money in your account or some sort of an error happens. At best, they punish you for something that’s not your fault. At worst, they just kick you when you’re down.

If you get fees charged for keeping an account (which if you use Internet Banking, basically costs the bank nothing anyway) – you are being ripped off. If you pay fees because of dishonours (the bouncing I just mentioned earlier), you are being ripped off. If you pay fees for anything that’s not an additional service (for example, if you decided to get some sort of financial analysis, and that wouldn’t be from a branch) – then you are being ripped off.

I am not going to tell you which banks have free bank accounts because there are comparison websites which already do that. I will tell you to carefully read all disclosure documents if you do open a new account, and to watch out for cheeky fees that the banks can charge. All fees should be listed in the Product Disclosure Documents and Fees and Charges guides that are given to you when opening an account.

I currently have completely free transactional banking and I refuse to pay any fees for it because that money does not earn interest. You shouldn’t pay fees for that either. Find a bank that will give you free transactional banking and also aim for one that has free access to a large ATM network so that you don’t pay cheeky $2 or more withdrawal/account-balance checking fees.

Note to home loan customers: If you have a home loan with your bank and you have transactional banking with them, but they charge you fees – just threaten to refinance, especially if they argue about the fees or are rude to you. Unless you’re a delinquent customer, they won’t want to lose you over a few small transactional banking fees. Don’t take bad service. If they start treating you like a bad customer, complain. I will soon post about the best way to complain to a bank.

3 reasons worth considering having a credit card.

It’s true, credit cards can be nasty for a number of reasons, such as:

  • you’ve chosen the wrong card type;
  • you’re in a troubling financial position and obtaining a credit card will over-extend you; 
  • you’ve got too many bills, and remembering an extra one is too difficult;
  • you treat the limit as ‘free money’, instead of seeing it for what it is;
  • if managed poorly, they can ruin your credit rating;
  • if you don’t follow your bank’s fraud and dispute resolution procedures, you could lose money if you are defrauded;
  • they could tempt you if you don’t exert self control; and so on.
Really, I can go on for hours about why many people choose not to get a credit card. 
I’m not here to do that though. I’m here to explain how I take advantage of the banks. There are ultimately three main reasons, and I will gladly address the above points to explain why in my particular situation, I am not too phased by the above. 
Why I have a credit card:
  1. Frequent Flyer points program; 
  2. Easy online payments for goods and services; and
  3. Bill / pay cycle management.
Frequent Flyer points program

In terms of managing money, everyone has different priorities. As someone who rarely holidays by choice, I have to say that obtaining a deal on frequent flyer membership was fantastic for me. This did not come with the credit card, but it certainly helped paved the way towards me getting a card. Many cards come with a frequent flyer points bonus. My first credit card came with 40,000 points – a boost that helped me go on the very trip that started this blog. 
Needless to say, I signed up for a credit card with an interest-free period long enough that meant that I never, ever pay interest – ever. Instead, I accumulate frequent flyer points for free. It works because I am always on time, so the banks can’t fault me for that. What it means for me is that I can accumulate many points over time and obtain free flights, and I really cannot say no to that.
Easy online payments for goods and services

Many merchants accept online payment via credit card these days. You can actually stick your credit card onto your Paypal account, securely paying for everything and accumulating points for the purchases that you would otherwise have made. 
Also, there is no need to be concerned about your Debit card being compromised. I can speak from banking experience that it is often much more difficult to stop scammy merchants on a Debit card, savings or transaction account than it is a credit card. 
So in other words, there is a little more peace of mind (at least in my mind) for those of us who are concerned about their details being compromised.
Bill / pay Cycle Management
If you find that your employer is a little bit less accurate with your salary, don’t worry – you can still pay your bills on time with a credit card. You just need to make sure that you aren’t always relying on this and are always paying your card on time. Otherwise, you’ll need to pay interest.
You can also talk to your bank to change your statement cycle to be more suitable, but this can take a few cycles to arrange.
In summary, those are my reasons for using a credit card. It costs me nothing and I reap the benefits of free flights. When applying for a credit card, be sure to be honest in your application and only get it if you don’t currently over-spend, as if you do, this will only put you into a negative financial situation.
I would never get a credit card if I thought I needed it. I don’t ever use it for emergency purposes, as that’s what an emergency cash fund is for. Also try to remember that if you are in a position where you might need one, that there’s a reason why the bank might give you one – and it is not necessarily for your best interest. 

Why I have a relationship with multiple banks.

Multiple banks? Why would you do that to yourself, why? Isn’t one bad enough?

Well, the short answer is actually yes, and that’s exactly why I have a relationship with them.

The truth is, as with any organisation, their main focus is making money. I took an interest in banks at a young age, when one of the majors here in Australia had a wonderful campaign to reel in children by getting them to save. This genius strategy meant that the bank gave us a branded money envelope and deposit slip book, all with the cuteness of kiddish characters – it was actually perfect. My whole school was hooked and I remember pestering my parents for a dollar to deposit because that was the cool thing to do.

Needless to say, I only have one account with this bank because of them trying to charge me fees when I was a student when student banking was supposed to be free, and I had presented my student card to them seven or eight times – but they just kept “forgetting” and charging me fees. That was really the first time that I thought about going to another bank.

You might think it’s petty to go to another bank because of a $4 or so monthly account-keeping fee, but I was fresh out of school, studying in university and trying to get by. I was relying on this $4 a month to help keep me afloat and the bank that I had been loyal to had betrayed me. I had to fight to get the monthly fees reversed and they wouldn’t even reverse all of them.

That’s when I found out – a competing bank was actually offering the same type of everyday, basic style transaction account for free. I didn’t even need to show them my student card, it was free for people regardless of their circumstances. Had I not had the negative experience with my bank, I might have graduated from uni and then started paying the fees unknowingly. I just had no idea about what was out there.

So this is a big reason as to why one should interact with multiple banks – even if it is painful to some degree. It might pay off in the long term because banks try to differentiate themselves through many of their products and services. Another thing I’ve also noticed is that as a new customer, I tend to often get far better treatment as an existing one as they need to actually work to get my business.

It’s like once the novelty wears off, I am no longer of interest to the bank. Furthermore, I know that if I tell my existing bank that I want to get a new loan but bank Z has offered me a better rate than what’s on offer, my existing bank will either try to match it, or risk losing me as a customer. So it’s a pretty good way to make them compete in my experience.

I’ve found that unless I’ve threatened to leave, many problems remain unsolved. I’ve probably found 1% of employees to be genuinely knowledgeable and helpful. It’s so hit and miss – no wonder people keep switching between banks. I’ve given up on “switching” as such, I just have things spread relatively evenly between the majors.

Of course, everyone has different experiences, but these are my ramblings and I hope that they’ve been somewhat insightful.