Maybe you didn’t quite nail your new year resolutions in January. Perhaps some of your circumstances have shifted and you’ve got a few balls in the air. Either way, it’s a new financial year so it’s a great time to have a good look at your finances and get your affairs in order. Here are a few actions to help you take control of your finances and get your money working harder for you in this new financial year.
1. Refinance your mortgage
Did you know that a $500,000 mortgage will cost you around $1,000,000 by the time you’ve paid it off? Your mortgage is quite possibly the biggest expense you’ll ever have in your life. A bit of research and enduring the pain of being on hold for half an hour could reduce your repayments and save you tens of thousands of dollars.
Refinancing involves reviewing your current mortgage, and potentially swapping your loan to another lender who can better meet your current needs, wants and circumstances. Market interest rates vary widely, and with the changing economic environment, it’s a good opportunity to make sure you have the best rate possible.
Find a bank or financial institution which is similar to the one you’re with (e.g. if you’re with CBA, look at NAB, ANZ or Westpac) and search for the most competitive loan similar to your current one. Call your bank and tell them they need to match that rate or you’ll leave. It’s quite possible that they’ll come back with a rate lower than you’re paying, but maybe not quite as low as you asked for. If you feel that it’s a good deal, agree. If not, find a good mortgage broker and move. Either way, you could be significantly better off for a very small amount of effort.
2. Develop a tax strategy
Given that a new financial year is also tax time, the focus can often be on just getting your tax return documents together. However, have you ever considered creating a long-term tax strategy?
Over the course of your career, you’ll earn millions of dollars and likely pay millions in tax. You could be wasting tens or hundreds of thousands in future tax dollars without a solid plan. It could be as simple as putting more into super, or as complex as reorganising your business structures. Either way, make sure you add it to the agenda next time you meet your accountant or financial planner.
3. Get hustling
With the advent of the gig economy and with the use of technology, a lot of people are earning that little bit on the side. Sometimes, it grows to the point where you have to choose your side project or your normal job. Either way, a little extra income can make a huge difference to getting you ahead financially.
A side income could cover lifestyle expenses such as travel. Perhaps it will enable you to grow an investment portfolio of shares and property. Or renting your spare room out on Airbnb could help you pay a mortgage off in 10 years instead of 25. Either way, it’s never been easier to turn your passions into income so start exploring opportunities!
4. Save more
One of the simplest financial concepts is also incredibly powerful at helping you take control of your finances. Saving allows you to accumulate capital that you can invest and earn an income from. You can then use that income to buy more assets and away you go.
Set your own savings goals, or explore apps like RAIZ that allow you to round up your expenditure to the nearest dollar. Then take that spare change and put it into shares or a savings account. It’s just spare change, but you’ll be surprised by how quickly you hit your first thousand dollars.
5. Organise your documents
No one likes thinking about it, but everyone should have a Will, Enduring Guardianship and potentially a Power of Attorney. If you have children, your Will should include a guardian for them. When the unexpected happens, not having these documents in place could put enormous stress on your loved ones at an already difficult time. Taking control of this aspect of your finances will help you rest assured knowing you’ve done all you can and the better off everyone will be.
If you have elderly parents, it’s particularly important to discuss what their wishes are with them. It can be an uncomfortable discussion for some, but it would feel worse to make decisions you aren’t sure about because you left it too late.
Make sure that anything you discuss for yourself or a loved one is written down and kept for future reference.