Your credit card interest rate
Most people have no idea what their credit card interest rate is, or how much they are paying each month in interest. While you might not know the percentage down to the decimal place, you should have a good general idea of what you’ll be charged if you don’t pay off the closing balance each month. If you don’t know, go and find out. You may be surprised to learn that it could be up to 20% or more!
How long you could survive on your savings
Ideally you would have enough savings to cover at least six months worth of essential expenses should you find yourself without an income. In reality, most people do not have this level of savings (in fact 1/3 of Australians have NO savings). Whatever your situation, it is wise to know how long your savings will last before you would be in serious financial distress.
How much your income protection insurance covers (& when it kicks in)
Tied into the point above, it is important to understand how much of your income your income protection insurance covers (you have income protection insurance right?!) and how long the waiting period is. Generally it is three months but this can vary.
What the excess on your car insurance is & how much it covers
There isn’t much point having insurance if you can’t afford to pay the excess or it doesn’t cover the replacement cost of your car. Make sure you know what is covered and how much the insurance excess is and that you have at least that amount tucked away in savings.
How the Medicare surcharge works and whether you are above the income threshold
Many people don’t realise that if they earn above the income threshold for the Medicare surcharge then they would be financially better off taking out basic private hospital cover. You can find out more about private health insurance here.
Exactly how much you earn and how much you spend
This may seem silly, but many people don’t know what their income is (or at least what goes into the account each month) or how much they spend. You need to know, at a minimum, what your essential expenses are and whether your income covers this. Many families get further and further into debt simply because they don’t realise they are spending above their means.
What other basic money knowledge do you think many people are missing? What have you been inspired to look into?