10 Ways to do Money Differently in 2022

WITH BORDERS REOPENING AND A SENSE OF OPTIMISM FOR 2022, THESE SIMPLE TIPS WILL ENSURE YOUR FINANCES ALSO ENJOY A HAPPY NEW YEAR! THERE’S SOMETHING ABOUT A NEW YEAR THAT CONJURES UP DREAMS OF MAKING IMPROVEMENTS: TO OUR HEALTH, CAREERS, AND HAPPINESS. GIVEN THE PANDEMIC SHAKE-UP WE’VE ALL ENDURED, I SUGGEST FINANCIAL HEALTH SHOULD BE TOP PRIORITY IN 2022. HERE’S ARE 10 TIPS TO GET YOU STARTED:

1. 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. Meanwhile, spending changes with marriage, divorce, growing your family, moving house etc.

Adjust your plan to your new reality. If costs have risen, look for savings elsewhere. If your income grows (go you!), you may have more to save or invest.

If you don’t know how, my book On Your Own Two Feet has you covered!

2. CONSIDER REFINANCING

Interest rates at record lows, but is your mortgage rate? Lenders won’t offer discounted rates 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.

3. 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.

4. LIVING ARRANGEMENTS

With borders reopening, many Aussies may look to change where they live: moving interstate or overseas; returning from abroad; a tree or seachange; 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 and your and their estate planning.

5. MONITOR ONLINE SPENDING

Online shopping is booming, but don’t let your spending boom unchecked too.

Jumping from site to site, you may not realise how much your credit card is racking up. Check it and pay it off regularly to avoid a nasty debt accruing.

Also weigh up buy-now-pay-later schemes. Sure, they break your purchases into more manageable instalments. But the costs spiral if you pay late or miss instalments. Will they affect your credit rating?

6. 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 “carryforward 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.

7. SAVE SURPLUS CASH

Anyone able to keep working during lockdowns likely saved money – lots of it. All those meals out with friends, 8 coffees, lunches, family outings, and daily commutes really add up!

Use those savings wisely. You could:

• 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

• Build new investments (e.g., buying managed funds, shares, investment properties)

8. ANALYSE INVESTMENT GAINS

Speaking of surpluses, you may have more than you realise. Investment markets have skyrocketed; sharemarket 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.

9. PLAN NEXT CHRISTMAS, BIRTHDAYS AND MOTHER’S DAY

It might seem strange to think about next Christmas while prepping for/recovering from this one.

But come Boxing Day, retailers slash prices to offload unsold holiday items – decorations, wrapping paper, cards, and non-perishable foods. Those discounts can be 50 per cent or more!

Why pay full price next year when you can have the same items so much cheaper now? Put some gifts away for birthdays, Mother's Day etc.

10. VISIT ADVISORS

Have you ever met with a financial adviser or seen your adviser recently? Now’s the time to fix that. Quality advice generally pays for itself.

Yes, we’d love to see your smiling face! But importantly, lots has changed that you may not be aware of: super contribution rates and indexing levels, small business support, insurance terms, and tax rates to name a few.

In money matters, ignorance is never bliss. Quality advice generally pays for itself and helps avoid a costly mistake.

So, visit your adviser to keep informed of your options and make 2022 a financially healthy year!

Helen Baker is a licensed Australian financial adviser and author of the new book, On Your Own Two Feet: The Essential Guide to Financial Independence for all Women (Ventura Press, $32.99).

Helen is among the 1% of financial planners who hold a master’s degree in the field.

Proceeds from book sales are donated to charities supporting disadvantaged women and children.

Find out more at www.onyourowntwofeet.com.au