Just like an annual doctor’s check-up is important for your physical health, it’s also important to regularly review your finances to check your overall financial health.
Unfortunately, if you’re one of the many Australians drowning in debt and struggling to get by, you might be dismayed to find that your financial health is flatlining.
But don’t let this news get you down. There’s plenty you can do to not only improve your overall financial wellbeing, but to make your financial health skyrocket. Here are six simple tips to help you create a brighter future for yourself and your family.
1. Make a budget and stick to it
Before you can start improving your financial health, you first need to work out just how healthy (or unhealthy) you are. One in four Australian workers stress about their finances, so now is the time to take stock of your overall financial standing and see what you can do to change it.
How much income do you earn each month? How much do you spend? Where can you cut back? What assets and liabilities do you have to your name?
Once you have a clear picture of your financial situation, you can make a budget to help you better manage your money. There are myriad smartphone apps and online budget planners available to help you do this. And if you’re disciplined enough to stick to that budget, your finances will be on the up in no time.
2. Create a savings plan
For most of us, saving money isn’t something that just happens. Instead, we need to make a concerted effort to start growing a bigger bank balance. Luckily, there are plenty of simple things you can do to save more money.
Once you’ve worked out a budget, work out a savings goal. How much do you want to save and how soon do you want to save it? You might want to save a deposit for a home, book a round-the-world holiday or just put some funds into an emergency account for a rainy day. Whatever your goal is, there are plenty of handy online calculators out there to help you work out how much you need to put aside each week or month to make it happen.
Next, calculate how much you can afford to put aside from your weekly pay packet, open a high-interest online savings account and start saving. You can even set up an automatic transfer straight from your pay into your savings account each week, saving you time and ensuring that you’re always working to grow a bigger balance.
3. Pay off your debt
No matter which way you look at it, interest payments are a killer. Whether you’re paying off a home loan or trying to get credit card debt under control, the interest that accrues on the money you owe can leave a big hole in your wallet. And when you keep paying interest over an extended period of time, you end up paying back a whole lot more than you borrowed in the first place.
Getting out of debt is an important step on the way to full financial health. By paying off any outstanding amounts you owe, you can remove the financial pressure of having to keep making repayments.
With no debt to your name, your future borrowing power will be greatly increased, allowing you to consider your options and take advantage of any attractive investment opportunities that may come your way.
4. Sort your super
When you have immediate financial pressures, retirement often seems like a long way away and something that’s not worth worrying about yet. However, don’t put off thinking about your retirement savings. By taking action now, you can ensure that you’ll be able to live comfortably once you stop working full-time.
If you’ve held multiple jobs you may also have multiple super accounts. If you track down your lost super and consolidate it into one account you’ll reduce the account fees you pay, freeing up more of your contributions to be invested.
There are a number of tax effective strategies that can help you make the most of investing – find out more. Make tax work for you
5. Get life insurance
What does life insurance have to do with your financial health? A lot.
Think about what would happen to your loved ones if you were to pass away unexpectedly. Would they be able to afford to pay off the mortgage, buy groceries and other everyday essentials and simply maintain their current standard of living?
What about if you suffered a serious illness or became permanently disabled and unable to work? Could you cope financially without your regular income? How would you pay for expensive medical bills and rehabilitation costs? What if your partner had to take time off work to be by your side?
Life insurance is all about providing protection against the unexpected. You’ve worked hard to get where you are in life, but if you don’t have any life insurance cover in place, your financial health can be destroyed a whole lot quicker than you might think.
Taking out cover can help provide peace of mind for yourself and your family. No matter what the future holds, life insurance means that you and your loved ones will receive much-needed financial support. Just make sure to consider your cover requirements and budget to ensure that you choose the right policy for your needs.
6. Ask an expert
Finding the time and the necessary knowledge to manage your money more effectively isn’t always easy. That’s why it’s always a good idea to get advice from a financial adviser.
If you’re too busy to take full control of your finances or you simply don’t know where to start, a financial adviser can assess your situation and then offer expert advice tailored to your specific needs. Whether you’re saving for a home, a holiday, a secure retirement or just because, an adviser can give you the help you need to create a brighter financial future.
Richard Laycock is an Insurance Expert at finder.com.au.