10 genius ways TO CASH IN
SIMPLE STEPS TO HELP GET YOUR FINANCES IN CHECK
We all have dreams of making changes in life – improvements to our health, careers, and happiness. According to financial adviser and author Helen Baker, we should also make improving our finances a priority.
“Given the pandemic shake-up we’ve all endured, I suggest financial health should be top priority in 2022,” she says. But how do we do that? Try Helen’s easy tips to do money differently and make a positive change.
REVISIT EVERYDAY FINANCES
A budget (I prefer the term ‘spending and investment plan’) is one of the five foundations on which financial security and independence are built. But things change over time, so it needs regular updates. Incomes change with promotions, new jobs, bonuses or redundancies. Spending can change with marriage, divorce, growing your family, moving
house and more. Adjust your plan to your new reality. If costs have risen, look for savings elsewhere. If your income grows, you may have more to save or invest.
CONSIDER REFINANCING
Interest rates are at record lows, but is your mortgage rate? Lenders won’t offer discounts unless you ask. Given recent property value gains, you should have more equity in your home as leverage. If possible, keep your loan-to-value ratio (LVR) below 80 per cent (i.e., your total loan amount is less than 80 per cent of your property’s current value). This will put you in a stronger negotiating position.
TRAVEL TEMPTATIONS
If you’re like me, border closures have left you with seriously itchy feet. But don’t book your next trip on a whim. You may need proof of vaccination – particularly challenging since every country, and each Australian state and territory, has its own requirements. As do airlines. You may also
need to quarantine on arrival and/or on return. There may be fewer flights than PRE-COVID, reducing availability. And prices will likely be much higher. Check your travel insurance carefully, too – sudden changes due to public health restrictions may not be covered.
LIVING ARRANGEMENTS
With borders reopening, many Aussies may look to change where they live: moving interstate or overseas; returning from abroad; a tree or sea change; upsizing or downsizing to more appropriate digs. Others feeling isolated may want to move in with their partner or family, while lockdown stresses may dissolve some partnerships. If new living arrangements are on the cards, consider not just the costs involved, but how those new arrangements will impact your finances.
MONITOR ONLINE SPENDING
Online shopping is booming, but don’t let your spending boom, too. Jumping
from site to site, you may not realise how much your credit card is racking up. Pay it off regularly to avoid a nasty debt accruing. Also weigh up buy-nowpay-later schemes. Sure, they break your purchases into more manageable instalments. But costs spiral if you pay late or miss instalments.
SUPER CATCH-UP
If you lost work or withdrew super funds due to COVID, your superannuation took a hit. Now that you’re (hopefully) working again, try to replenish those funds. Super catch-up rules (what the ATO calls ‘carry-forward unused concessional contributions’) enable you to make additional contributions without attracting extra tax. Not replacing that money could lose you as much as $200,000 towards your retirement.
SAVE SURPLUS CASH
Anyone able to keep working during lockdowns likely saved money – lots of it. All those meals out with friends, coffees, lunches, family outings, and daily commutes really add up. Use those savings wisely. You could use it to pay off debts – high-interest ones like credit cards; pay down the mortgage; pre-pay the full year on council rates or insurances (which generally attracts a discount); make extra super contributions or build new investments (e.g., buying managed funds, shares, investment properties).
ANALYSE INVESTMENT GAINS
Speaking of surpluses, you may have more than you realise. Investment markets have skyrocketed; share market and property prices have soared. What will you do with those gains? Consider whether it’s time to cash out or if you can leverage them to fund new investments. Also, how do those gains impact your tax liability? Gains are nice, Capital Gains Tax not so much.
PLAN FOR BIG SPENDS
It might seem strange to think about next Christmas already, but it’s a good idea to plan ahead for any gifting. Look for sales and discounts. Why pay full price when you can have the same items so much cheaper now? Put some gifts away for birthdays, Mother’s Day and Father’s Day.
VISIT ADVISERS
Have you ever met with a financial adviser or seen your adviser recently? Now might be the time to fix that. Quality advice generally pays for itself. Quite a lot has changed that you may not be aware of including super contribution rates and indexing levels, small business support, insurance terms and tax rates, to name a few. •Helen Baker is a licensed Australian financial adviser and author of On Your Own Two Feet: The Essential Guide to Financial Independence for all Women (Ventura Press, $32.99). Visit onyourowntwofeet.com.au