The start of the financial year is a great time to hit reset on your money goals so you can ensure that 2016/17 keeps you in the black.
In part, that means doing a stocktake on the past year, clearing out any financial clutter and preparing for the unknown.
These tips, prepared by RateCity.com.au, may help you get ahead in 2016/17.
1. Set a fresh budget
Start by collating your accounts and working out exactly how much you spent last year, what you spent it on and how you may be able to do better this year. The rule of thumb of saving five or 10 per cent more than you did last year could mean an extra holiday this year. It may be as simple as leaving the budget untouched for most essential expenses, but reducing discretionary spending. Apps like PocketBook can be handy for budgeting and Microsoft Excel has good functionality for keeping spending and savings goals aligned.
2. Check your entitlements
Once you know how much you want to spend and save this year, it’s worth making sure you’re getting all of the income and discounts you’re entitled to. The obvious one is the age pension, which is available to eligible over-65-year-olds, subject to income and asset tests. But many seniors find a lot of value in the Age Pension’s related entitlements, such as the energy supplement, which adds up to about than $21 a fortnight for couples, and the Commonwealth Seniors Health Card, which entitles recipients to thousands of dollars in discounts each year.
3. Do a fee audit
Fees can account for an alarming proportion of the household budget, which makes little sense when there are so many lenders competing for your business with low or no fees. Last year, Australians spent $4.33 billion on fees that were largely avoidable. Switching to a no-fee credit card and/or housing loan is an easy way to save yourself hundreds of dollars a year.
4. Make sure your super/investments are where they should be
The structure of super and other investments can get complicated, so it’s worth putting in a call to your fund or adviser early in the financial year to make sure your investments are where they should be for your age group, your risk tolerance and for tax purposes.
5. Get the estate sorted (again if you need to)
A lot can change in a year and if your circumstances have, you may want to revisit your will and estate planning to ensure the right boxes are ticked. This is especially applicable if you’ve had any new marriages or babies in the family, asset changes, health scares or a loved one has passed away.
6. Pay down bad debt
While your financial motivation is high, it could be worthwhile setting a plan around how you’re going to knock off any debt that’s hanging around. Setting a timeframe and plan around what you could sacrifice to pay down debt is a useful start.
7. See how your savings are tracking
If you have money in term deposits, you may have noticed you’re not getting as much bang for your buck as you once were. With interest rates at record lows, savers are among the first to suffer. However, there are still some high-yielding savings and term deposit accounts around, at least half a dozen of which are rewarding savers with more than one per cent more than the official interest rate. It could be worth switching.
8. Ask whether your insurance is in order
Health insurers often kick off the new year with offers to entice new customers who may not have considered them in the past. If your health insurance doesn’t tick the boxes, it may be worth collecting a few quotes from competitors to make sure your needs are covered. The same goes for life insurance, car insurance and home and contents insurance.
9. Create a plan for the unplanned
Life has a tendency to catch us by surprise and it’s not unusual for our financial health to suffer when it does. It may be worth having a separate account or savings stream or even a shoebox you add to regularly to cover you in the case of the unexpected.
10. Reward yourself
There’s no point in exercising discipline if there’s no pay off. If you had a good year last year, why not start the new year with a short trip away or a gift for yourself – then aim to do the same next year if you hit your goals. Here’s to a financially healthy 2016/17!
Kate Cowling is the Personal Finance Editor at RateCity.com.au.
