A FINANCIAL MOMENT

How to master your money

Damian Gibson

WITH calendar year 2022 just around the corner, it is a great opportunity to start planning your goals for the approaching year.

Why not put your finances on top of that list and make 2022 the year you set yourself up financially?

A new year is always a great time to create new habits, and this should be applied to your money.

If your financial situation is a bit out of control it can leave you feeling worried and anxious, which adds unnecessary stress in your life.

According to a recent study by Melbourne University (2021), the level of financial stress among Australians is growing.

Don’t let this be you.

Take control and master your money.

Here we will discuss some important areas of your finances that should be reviewed as a starting point.

CASHFLOW MANAGEMENT

Cashflow is the lifeblood of your financial health, and it is the best place to start your review.

Keep in mind, it doesn’t matter how much you earn. What matters most is your attitude towards your money and how you manage it.

Sometimes we spend subconsciously which can lead to bad spending habits over time.

That’s why it is really important to understand your cashflow (what’s coming in and where it’s going).

An exercise as simple as reviewing your banking transactions at the end of each week can help you identify unnecessary spending behaviour.

Don’t get me wrong, you still need to enjoy yourself. But more than likely you’ll find a few black holes in your transaction history, such as that streaming service you never use.

INVESTING YOUR MONEY

If you’re in the beneficial situation of having a surplus of cash after expenses every week, you might consider investing some of your money.

Investing money has never been easier.

There are multiple platforms and products available now that can help get you started.

Investing in assets is a great way to help expedite the growth of your money over time.

It is important to ensure that the structure in which you invest your funds is suitable and in line with your savings goals.

It is also important to understand what you are investing in, the associated fees, tax consequences, access to funds and the level of investment risk.

REVIEW YOUR SUPER

For most Aussies, superannuation is their second biggest investment after their home, so you need to make sure you pay it some attention.

FEES

Not all super funds are created equal and they vary in cost significantly.

Review the fees you pay inside super and ensure you are getting the best bang for buck.

Reducing your super fees is one of the easiest ways to boost your balance.

INVESTMENTS

Ensuring your money is invested in line with your goals (e.g. what rate of return are you hoping to achieve, how comfortable are you with risk etc), is critical.

Make sure you understand how your money is invested and what it is invested in.

NUMBER OF FUNDS

If you have more than one super account, you may benefit from consolidating them into one account.

Consolidating your super will help you save money by paying only one set of fees and it will be easier for you to keep track of your balance.

Before consolidating there are several important factors to consider, so speak with a professional.

BOOST SUPER & REDUCE TAX

Contributing some of your pre-tax income into super, commonly known as salary sacrificing, can help you reduce your tax and invest more for retirement.

Depending on your circumstances, salary sacrificing could reduce the tax you pay on your income by up to 32 per cent.

Build your wealth instead of giving it to the tax office.

ESTATE PLANNING

Although preparing a Will is important, estate planning is about much more than that.

While a Will can help ensure your estate is distributed according to your wishes, it may not be effective in dealing with a significant portion of your wealth.

For example, the proceeds from superannuation funds and life insurance policies do not automatically form part of your estate, which means that addressing these investments in your Will may be ineffective unless you take some important additional steps.

A well-prepared and executed estate plan can ensure the right assets go to the right people at the right time, in an efficient and tax-effective manner.

PROTECT YOUR WEALTH AND FAMILY

How would you pay your mortgage and meet your other living expenses if your income ceased?

Think about the risks that you face in everyday life.

Some risks cannot be removed entirely.

However, for many risks that we cannot eliminate, we can mitigate their impact by taking out suitable personal insurances.

If you do not have adequate insurance, an unforeseen death or illness could have severe consequences for you and your family.

However, if you already have personal insurances in place, it is just as important to make sure you hold the correct types and levels of insurance.

While we have only touched the surface here, the above areas are a great starting point.

As financial advisers, we understand people lead busy lives and sometimes forget to review their financial situation.

Remember, you don’t have to go it alone.

If you don’t have time to get on top of your money or aren’t sure where to start, come in and have a chat.

*Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.

Marg earns RESPECT

A LOCAL tax specialist’s expertise and service to her clients during the COVID pandemic has been recognised with a national award.

Marg Marshall of Lindisfarne was the only Tasmanian finalist in The Tax Institute’s Tax Advisor of the Year Awards, and was named the winner of the RESPECT SME 5-15 Partners category at a recent online award ceremony.

A Partner at Hobart firm WLF Accounting & Advisory, Ms Marshall has more than 25 years experience in tax advisory at a technical level, specialising in transaction and structuring advice, capital gains tax, not-forprofit tax concessions and deceased estates.

The Tax Adviser of the Year Awards recognise both technical excellence and outstanding client service by tax professionals.

The RESPECT Awards categories were introduced this year to celebrate the achievements of members in tackling the challenges COVID has posed for business communities.

Ms Marshall’s awardwinning approach focused on people, as she ensured that every WLF client and staff member received vital COVID information as it was announced.

She encouraged staff to share that information with any business owners they knew – whether or not they were WLF clients.

“The past 18 to 24 months have presented challenges for businesses across so many sectors, as well as not-for-profit organisations,” she said.

“As the uncertainties of COVID became apparent, people were frightened. They were faced with losing their income, worrying about their staff and what the future might look like for their businesses and their families.

“While it has been heartbreaking to see people struggling, I have also been very proud of the way in which we have been able to provide support and solutions.

“Despite the unprecedented difficulties we have faced over the past 18 months, there are many positives that have come through and I believe we can build on these to create a great future.”