Pre­pare for the worst by sav­ing

Townsville Bulletin - - Your Money -

RE­SEARCH from Sun­corp shows 900,000 Aussies are wor­ried about their fi­nan­cial se­cu­rity fol­low­ing the floods and Cy­clone Yasi.

The fi­nan­cial strain forced about 500,000 to take out a loan, draw down a mort­gage, or ac­cess su­per­an­nu­a­tion or new credit card.

How fi­nan­cially pre­pared would you be if faced with dif­fi­cult fi­nan­cial cir­cum­stances?

And don’t think it’s only in­come earn­ers at risk.

Re­search from the Univer­sity of Mel­bourne’s Cen­tre for Cor­po­rate Law and Se­cu­ri­ties Reg­u­la­tion found a 261 per cent in­crease in per­sonal in­sol­ven­cies be­tween 1990 and 2008, with bankrupts who classed them­selves as man­agers, pro­fes­sion­als and as­so­ciate pro­fes­sion­als ris­ing from 11.3 per cent to 27.3 per cent of the to­tal.

Re­search from the Aus­tralian

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By DAVID and LIBBY KOCH Bu­reau of Sta­tis­tics some years ago found only 20 per cent of Aus­tralians re­tired when planned.

Most peo­ple’s planned re­tire­ment is brought for­ward due to out­side fac­tors, so re­tire­ment is un­der­funded and life­style eroded.

Aus­tralians are gen­er­ally hope­less at pre­par­ing for fi­nan­cial emer­gen­cies, so let’s put that right by adopt­ing a few sim­ple steps.

Take out all your in­surance poli­cies and make sure the house, con­tents and car are all cov­ered prop­erly. Then check fine print.

Do a quick cal­cu­la­tion on how much it would cost to re­place ev­ery­thing in your house. We bet you’ll be stunned at the to­tal amount. Fix it quickly.

Make it a pro­ject to have a six­months salary emer­gency fund. Put aside any wind­falls. Safe­guard cash flow with in­come, life and trauma in­surance. Make debt man­age­able. Pay off your most ex­pen­sive debt and then start work­ing on the rest.

Start sav­ing in su­per­an­nu­a­tion early and reg­u­larly

Re­tire­ment should be the best time of your life. It shouldn’t be a time of fi­nan­cial un­cer­tainty.

Su­per con­tri­bu­tions at­tract tax ben­e­fits so take ad­van­tage of them. Be sure you are in a good fund match­ing your risk pro­file.

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