Now the expensive Christmas/New Year period is over, it’s the perfect time to review your finances.
It’s one of those tasks we all keep putting off – but the sooner you review your finances, the sooner you can stop fretting.
To make your life easier, I’ve developed four easy steps to get your finances back on track. You’ll be achieving those hard-earned goals and becoming financially fit in no time.
1. Spy on your cash flow
If setting a cash flow budget seems foreign to you, now is the perfect time to get started. You’re probably back at work earning and spending a fairly predictable amount, making it much easier to set your goals.
Already set a cash flow budget? Make sure you’re evaluating this every time your circumstances change. Personal and financial situations are constantly changing, and it’s important to make the correct adjustments. Are you saving and spending what you expected?
Setting unrealistic goals or not taking into account changed circumstances are the most common causes for budget blow-outs.
Remember to take into account regular spending as well as those less common bills due annually and quarterly.
Work out how much money you have left over at the end of each pay cycle and put this towards your savings/paying off your debts.
2. Consolidate those pesky super accounts
According to the Australian Taxation Office, ‘14.8 million Australians have a super fund account.’ Of those, 43% have more than one superannuation account. While these statistics are incredibly high, they aren’t surprising. Many people will open a new super account every time they switch jobs, and end up with four, five, or even 10 different superannuation funds. This results in many Australians spending thousands of dollars each year in unnecessary fees.
If you’re one of the 43% of Australians, I strongly advise consolidating your funds. This means you’ll only have one account to manage and you’ll probably save yourself thousands of dollars in fees every year.
Many superannuation funds also include a default level of insurance cover, so you may be paying unnecessary insurance premiums as well.
3. Review your life insurances
As I’ve mentioned above, our circumstances are constantly changing. Make sure your personal insurances still match your current situation and ensure you’re not paying too much or getting too little for what you need. Anything from a new job or growing family to a change in relationship status is a reason for a review!
There may be coverage that needs to be added, removed, and/or increased.
According to Zurich’s 2016 Global Survey: Income Protection Gaps, just 27% of Australians have income protection, and only 19% said they had a meaningful knowledge of income protection insurance. By comparison, 83% of Australians have car insurance.
With this in mind, the question must be asked: ‘are our priorities right?’
4. Find a motivating coach
Similar to a fitness program or change in diet, sometimes you need that extra boost to get going and keep you on track to success. A professional ‘trainer,’ aka financial adviser, will make sure you’re using the best program for you. Or better yet, your coach can check in with you and make sure you’re achieving the results you set out.
Even if you consider yourself to be financially savvy, it’s always good to have an expert on hand to help get ahead faster and make your money work harder.
If you need some help getting financially fit, or you’re ready to make some bigger plans for your financial future – contact NK Consulting.