IN 2019, the University of Melbourne completed some research on how Australians feel about their finances and financial services providers.
The findings were both sad and damning.
What was sad?â– 1 in 3 Australians are dissatisfied with their financial situation.â– 77 per cent of Australians said they have regrets with regards to their finances.â– Unexpected life events often negatively impact finances and most Australians are not prepared to weather such shocks. 1 in 5 Australians have less than $1000 in savings and half have less than $10,000.
What was damning?Melbourne University found that the most common barrier stopping Australians from improving their financial situation is a lack of trust in financial institutions and advisors.Ouch. As a financial adviser who takes pride in my work and cares for my clients that is upsetting to read.That can be understood given the attention the financial advice industry has received over the past few years.
What can people do?â– Know your numbers and use a proper budget tracking program/Appâ– Use a proper budget tracking tool such as MyProsperity (Which we use with our clients at CreationWealth).This will help you understand where you spend your money. Once you know exactly where you spend your money it will help you better prioritise what spending habits you will change.â– Be deliberate with saving or putting money aside for big expenditure itemsâ– The real crux of budgeting is to set aside a percentage of your net income to go towards an investment plan. My personal budget allows 10 per cent of my net income to go towards myinvestment plan. This money is put aside each month without fail and what is left over is what is available to spend on our household necessities and discretionary items.â– For someone who is retired, setting up a separate account to build savings for a new car or holiday is a good way of ensuring there is no temptation to spend that money in the short-term.
Be organisedWith most bills and invoices these days being electronic or via email, there is no excuse not to create a simple filing system.Here are some quick and easy ways to be financially organised:â– Create a folder in your email titled ‘Tax 2020-2021’ and save all emails with bills, invoices and receipts to this folder.â– Set up a Dropbox folder or Google Drive folder titled ‘Tax 2020-2021’ and as soon as youreceive a receipt, statement or invoice – save it directly to this folder.â– Really use technology well. Programs like MyProsperity have a ‘document’ portal where all tax statements, bills and receipts can be uploaded. The benefit of a program like this is that you can give access to your Accountant to gather what they need to complete your tax returns.
When was the last time you reviewed your mortgage?From experience, I find roughly every 3-4 years is a good time to review your mortgage and investment loans. Banks can be a little sneaky with variable interest rates.
They entice you with a low rate when you first join, then they slowly increase the variable rate.
They know that a little increase here and there or not passing on the full RBA rate cutwill not have their customers leaving in droves.Refinancing is a pain.
However, after a few years, the numbers may stack up.
Going through a refinance to a new lender can provide substantial savings. A good mortgage broker can help you with this.
If you still have a mortgage heading into retirement, one idea may be to keep your cash in an offset account or redraw facility.
This can help to provide a cash buffer in time of an emergency. Be cautious though, re-drawing funds will then incur interest repayments.
I do not need to quote copious research showing people who write down personal and financial goals succeed more than people who do not.
Here is a different approach: start writing down what you have achieved over the past one, three and five years.It is very rewarding to reflect on all your achievements. This creates a good mindset to start writing goals for the next one, three and five years.Here are a few board categories which may help:â– Financialâ– Familyâ– Spiritualâ– Communityâ– Personal Healthâ– CareerOnce you know yourself – get proper professional financial advice.
Let us be honest, most people do not self diagnose their illnesses – they go to a doctor.
They do not complete their own tax returns – they go to an accountant.
They do not try to interpret the law themselves – they go to a lawyer.
By following the above financial tips, it will help you to build your confidence with your own finances.
Contact Andrew:M: 0422 038 253E: andrew.zbik@creationwealth.com.auW: creationwealth.com.au
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