'Use the one-third rule' for cash handout

Mozo

Tuesday 17 March 2009

With the cash bonuses hitting bank accounts and being popped in the mail, the Australian’s money expert Tim Blue reckons that consumers should adopt the one-third rule when considering what to do with it.

He insists that ploughing a third of the bonus into a high-interest savings account is a very wise idea at the moment.

Meanwhile, the second third should be used to cover living expenses, while the remainder should be used to fund a bit of a spending splurge.

"It could be tweaked a bit according to age and needs, but whatever prime minister Kevin Rudd might say, saving a big slice is wise for the moment," he advises.

Laura Menschik of WLM Financial Services tells the paper that those with credit card debt should think seriously about using the cash bonus to clear their plastic debt, as interest rates are still stubbornly high.

This may be a particularly smart move for those who are nearing the end of their introductory credit card balance transfer period, after Mozo revealed that many credit card providers are stinging people with punitive rates after the deal ends.

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