Whether you want to set up a savings goal or work out a debt consolidation plan - we speak with a financial adviser on five ways to check your financial health.
Assessing your finances may seem overwhelming, but you can perform a quick health check by focusing on five things:
- Cash flow and budgeting
- Personal insurance
- Debt management
- Estate planning
- How cash flow and budgeting can help your financial-health
“It’s a common misconception that only people who lack discipline need a budget,” says Nick. “In fact a budget is a simple and effective tool for most households - whether your annual income is $40,000 or $400,000.” By being more mindful of where your money is going, you’ll be able to spend it on the things you need (or want) the most, and you’ll have a better idea of how you’re set up for major purchases in the future.
- How personal insurance can help your financial-health
“We never know what is around the corner – particularly at the moment,” explains Nick, “and unfortunately we can’t assume that issues with health or employment only affect other people.” To protect your financial health, it is sensible to insure your income. “For many people their income is their greatest asset, and everyone - especially those with debt or financial dependents - should consider income protection insurance in the same way as they might cover their home or vehicle.” When reviewing your insurance cover, don't forget that you can claim tax deductions on some premiums.
- How your superannuation can help your financial-health
Financial health isn’t just about the here and now, it also relates to how prepared you are for the future. “It’s important to start making super contributions as early as you can, and to review how much you’re putting in regularly,” says Nick. “There is no more tax-effective way of saving for your retirement, so you should always consider making greater contributions to your fund than what is required by your employer.”
- How debt management can help your financial-health
Being in debt is sometimes necessary, but there are ways to manage your situation to ensure your finances are as healthy as possible. “If you’ve got a mortgage,” advises Nick, “you should be checking in on your rates at least once or twice a year. The best offers are usually only available to new customers, but you can simply call your provider and see if they can offer you a better deal.”
- How estate planning can help your financial-health
“Many clients overlook this important part of their financial portfolio,” explains Nick, “and estate planning is so much more than drafting a will. It also includes superannuation benefit nomination, life insurance proceeds, business succession planning, family trust succession, powers of attorney, guardianship and much more.” It might seem like a simple task but there are a few things to consider when choosing a beneficiary.