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Increase your financial skills - simple steps to do at home
24 September 2020
What’s my monthly repayment capacity on a loan? There’s a rough formula you can use: Gross income – tax – existing commitments – new commitments – living expenses – emergency fund = monthly surplus.
If that all looks too hard, try our new how much can I borrow calculator first and work up to how much you could repay.
The simple steps in the borrowing calculator are a great way to learn how to play around with your finances and lifestyle costs and learn about budgeting – your income and expenses.
Playing in this sort of safe environment has the added benefit of increasing your knowledge of financial terms and concepts.
Once you’ve worked out how much you can afford to borrow for that first home or investment property, use our other calculators to discover more, like how long it might take to save for a deposit. There’s also a whole bunch of answers to questions you might have about terms like borrowing power, equity, and even LVR – loan to value ratio.
Increase borrowing power
One thing many of us want to know, once we’ve committed to a savings goal, is how to increase our borrowing power. It depends on how much you earn and what you spend but here are some tips to help increase your borrowing power for a home loan for example:
- Reduce your credit limit – close any unused credit cards
- Pay down your debts, like personal loans
- Lower your spending
- Keep a good credit score
- Split your liabilities with a partner if you’re borrowing on your own
- Start or keep saving to demonstrate a good savings history.
What is financial confidence?
The mindset, skills, and ability to be self-sustaining in whatever economic conditions you find yourself is one way of defining financial confidence. Without the three parts of the equation working together it is difficult to build financial confidence.
Understanding how you can budget, save and spend builds your skills and knowledge and bolsters your mindset and abilities, but without the right attitude and abilities, including the ability to remain committed, it’s impossible to build your skills. You may find these Ruby articles helpful How to make yourself more employable; a few home truths about credit cards; spring cleaning your finances.