A friend of ours took a week off work recently and we were excited to hear what she’d done, where she’d been and the highlights.
“I just relaxed at home and focussed on my Life Admin.”
“You know, all those things you never get around to but can make your life function so much smoother and reduce stress.”
We know what she means and it inspired us to spend a weekend getting our financial foundations right.
1. Organise Your Tax
We can’t believe the number of times people ask us whether the Tax Office really cares whether or not you’ve done a tax return for a few years… hell, yeh they do.
Saying you’ve lost receipts or Group Certificates will not cut it and you’ll, at the very least, get slugged with huge fines if they find you out. So put the effort in now.
That means chasing, sorting and filing deductible receipts and Group Certificates. Make sure you know your Tax File Number and keep it in a safe place. Gather documents for any investments and get banking records sorted.
Link your MyGov account to the ATO to fill in simple tax returns and use the tax office’s resource centre for specific information. It’s also worth hiring a tax agent to sort everything once and for all… their fees are tax deductible.
2. Sort Your Important Documents
If you died suddenly where would loved ones be able to quickly find all the important documents. Investment details, insurance policies, will, house deeds, banking etc.
If your answer is “they couldn’t”, then do something about it… now.
Buy a good old fashioned expandable file from Officeworks and get collecting. Then, once you’re finished, tell loved ones where to find it. You’ll feel an enormous sense of relief and your partner will sleep better at night.
3. Get On Top Of Your Financial Position
Family finances don’t quite add up? Increasingly hard to make ends meet?
Go grab a budget template from your bank’s website and start filling it in. Separate fixed expenses to survive with variables like entertainment, travel, subscriptions etc. Work out the financial leakages you didn’t know about and plug them.
Start with recording (on paper or in “notes” on your smart phone) all your incidental expenses for a week… takeaway coffees, bought lunches etc. Then start to see where you can improve.
Once the household budget is under control then start on reviewing your investments or, if you haven’t any, maybe a plan to start building some wealth outside of just the equity in your house. Look at making an appointment with a financial adviser to review your portfolio or design a plan to start investing.
Get some referrals from friends, most banks have their own financial planners or contact the Association of Financial Advisers for a recommendation.
4. Assess Your Insurances
Stop automatically renewing your insurance policies. It doesn’t matter whether it’s life, income protection, car or house and contents, they should all be reviewed regularly.
Start with whether the level of cover is right because your circumstances could have changed.
Then ring up your provider and ask them to review your policy to see whether they’ve launched others which could provide better value for the same cover.
After getting a recommendation, contact a couple of competitors and ask for quotes from them. If you get a better offer go back to your provider and ask them to match, or, better it… it’s less hassle to stay put but only if the value is there.
5. Slash Bank Fees and Interest
Exactly how much do you pay in interest and fees to your bank in total. Add them up… loans, credit cards, transaction accounts… everything.
We reckon you’ll be amazed… no wonder the banks make big profits. Now start culling.
Close accounts you don’t need; change your banking habits to keep within fee free rules; ask for discounts on loan rates; shift to simple no-fee accounts. You’ll save a lot.
6. Read Your Will… or get one done
No-one likes thinking about dying… but guess what? It will happen.
Making sure you have a proper will to reflect your financial circumstances and protect loved ones is part of being a responsible adult who cares for others. And it has to be reviewed regularly to reflect your changed life circumstances.
It you don’t have a will… get one done. From a simple one bought on line through to sitting down with a lawyer for more complicated situations, just do it.
If you have a will but haven’t read it for a while, get it out and review whether it still complies with your wishes.
7. Understand Your Superannuation
Do you really understand your superannuation fund… how many you have, fees, performance, what investments options you’re in and how they compare? Remember your superannuation fund could turn into the most valuable investment you have so it’s worth looking at it closely.
If the fees are too high, or it’s underperforming, or you’re in the wrong investment options, it could severely impact its value and your retirement lifestyle.
Start by logging into your MyGov account see if you have any past super funds you’ve forgotten about. If so, consolidate them into one. Then get out your last superannuation statement and compare fees and returns using a comparative data site like Canstar .
Flip over your statement and find which investment options you’ve chosen and whether they’re still appropriate for your circumstances.