Spring means different things to us all. Some associate springtime with flowers in bloom and all things fresh but for others it’s about hay fever and too many tissues! But we all know the meaning of a great spring clean.
When it comes to that monster spring clean each year, we often dedicate time and serious elbow grease to our home and go through cupboards to determine what to keep and what to throw. And yet, we don’t give our finances the same attention. We should. We must.
There’s no point getting the rubber gloves on unless you know what your financial affairs actually look like. Do you see the big picture (cocktails on a private beach perhaps) and are you across the nitty gritty details too?
It’s hard to follow any of the steps below such as revaluating the mortgage, consolidating your super or assessing insurance policies unless you have your head around the right information. Gather what you need and familiarise yourself with your weekly budget, the household income and expenditure, home or business loans, investments, policies, superannuation details, tax returns etc.
Find a way to manage it all that best suits you. Don’t be daunted – a spring clean is about brightening everything up to make financial matters for the 12 months rosy!
When did you last review your mortgage? Did you know it’s advisable to do so every 12 months? It’s all well and good saving a little money here and there but by taking a fresh look at your mortgage, there’s the capacity to save thousands over the life of your loan. Refinancing can often be done online or over the phone.
Before you look around, determine the elements of your home loan that work well for you (i.e. the capacity to redraw or having an offset account) to ensure that if you do switch, you’re not losing those key benefits.
It can also be worthwhile letting your current lender know you’re considering other home loan options. They may be able to offer something more competitive and will be keen to retain you as a customer. Ideally, should you find a better rate, aim to stick to the same repayments as before (or better still, top them up a little) so that your home loan is reduced sooner.
Once you’ve worked out your best fit home loan, it’s time to ensure any savings are working hard too. Is your money growing nicely by sitting in your chosen bank account? Are your savings or term deposits still benefiting from healthy interest rates or has the bank made some rate changes over the past year?
Term deposits generally pay higher interest so keep this in mind with money that can stay put for a while. Be sure you’re getting the best deal for your cash and be prepared to shop around. Keep in mind that some financial institutions will offer a fabulous introductory rate or bonus to new customers so be sure to ask about rates for when that honeymoon period ends too.
You may have had the same insurance policies for years and haven’t taken the time to reassess them as your life, family, earnings, residence or personal belongings have changed. Your insurance policies need to be reflective of the here and now.
We all want the peace of mind of knowing we can provide for our loved ones should illness or injury force us to stop working. It’s important that general living expenses could still be met should something devastating happen to the primary breadwinner in any household.
Do you have adequate personal insurances in place by way of Life Insurance, Trauma Insurance, TPD Cover or Income Protection Insurance? It’s essential to know how much cover is linked to your superannuation and if this is inadequate, take out an additional policy.
Home and Contents Insurance
Take a good look at your home’s building policy – does it cover all manner of events/ disasters should you lose everything? If you are a homeowner, does your policy reflect the current value of the property, factoring in any recent renovations or improvements? With your contents insurance, does your estimated figure reflect the appropriate value of replacing the items under your roof if it ever came to that?
Don’t be afraid to look for more competitive options. Keep in mind though that some insurers entice newcomers with great value products only to sting them 12 months later when those same sweeteners are no longer available as your customer status has changed.
Be it your internet, energy or phone provider (or even your regular mechanic or tradespeople) there are always competitors in the market. And yes, it can be time consuming to find a better deal but when you do, lock it in for at least 12 months. Alternatively, contact your existing provider to see if they can improve upon your current plan / offer. As with your home loan, they should be willing to work hard to keep existing customers satisfied.
It’s springtime – often a reflection of new beginnings so why not make a connection with your superannuation? After all, it might lead to something special (a better bottom line perhaps?) Start by looking at your most recent statement. How is your balance looking compared to a year ago? If you have more than one account, consolidate your accounts. Consolidation will save on fees too.
It may also be worth investing your super, an approach often encouraged for those a decade or more away from retirement. If you’ve been on the move over the years, double check there’s no lost super that you are entitled to. A search can be done online. To avoid super going walkabout, ensure your fund has the correct personal / contact info on file.
Also, consider making extra contributions to your superannuation. Perhaps set up a direct deposit so those pennies don’t reach your bank account but rather, go directly to your fund.
When it comes to superannuation and the options available, it can be beneficial to talk to those in the know.
Our finances should always be a work in progress. We can seek alternatives, improve our habits and ideally, grow our money. So, as the weather warms up, it’s time to shake off those winter doldrums, grab the feather duster and get stuck into some financial spring cleaning!
We credit the following articles as source material from which this article was developed;
What you need to know
This information is provided by Invest Blue Limited (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.
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