Firstly, this newsletter is to check in on all how all my clients are coping, especially those located in Victoria. A 6th lockdown brings with it frustration, anger, despair, and impatience. We are asking ourselves when will these restrictions ease and when will we stop going in and out of these lockdowns? Although we don’t have a crystal ball to answer these questions, we can help you get through this. We are hearing of more and more individuals being stood down without pay, being made redundant or asked to reduce their working hours. With this comes even more strain on an already fragile community. Now more than ever, you need to consider your finances and extend the life of every single dollar. Here are some tips to help get you started.
Budget
Most of my clients know what a budget looks like, but if you haven’t already done so, now is the time to develop your budget. Knowing where every dollar goes will help you to understand where you are spending your money and where you think you can reduce your costs. Most people are surprised to see how much their small purchases add up to every week, or how much they are spending on certain activities that they didn’t realise they were spending. In addition, keeping your reoccurring monthly expenses as low as possible can save you significant money over time. So maybe now is the time to decide what’s important to you and what you think you can live without. A widely used concept when creating a budget is the 50/15/5 approach. Where 50 percent of your income goes to essentials, 15 to retirement savings and 5 for emergency savings.
Re-evaluate your insurance premiums
As insurance is an essential part of any sound financial plan, at least once a year I evaluate all my client’s insurance policies to ensure that their premiums not only remain low (as they tend to creep up) but they also include the best coverage for my clients’ needs. You should be monitoring your policies consistently, to make sure you are getting the best deal. By making small changes and staying on top of your policies you could be saving thousands of dollars each year.
Interest rates
For many of us, paying off a home loan is likely to be one of the biggest regular expenses in our budget. And it could stay that way for up to 30 years. But that shouldn’t mean you ‘set and forget’ it for the life of the loan. Especially at this point of time with interest rates being so low. You could lock in now for a great rate saving you hundreds of dollars each month and easing the lockdown effects. You may not even need to change providers, a simple phone call asking for the best rate might do the trick!
Be smart with extra savings
When it comes to extra money saved from pandemic-related lifestyle changes, knowing what to do with this surplus cash can be quite daunting. Depending on what stage of life you are at will dictate where you think you need it most. Now is the time to get into contact with your financial planner. The stock market is at a record high, and as always, the best time to get in the market is whenever you have the money! You could spend the amount you have today, or you could leverage it to build more wealth and spend more tomorrow. Recently I have been helping my very happy clients gain record high returns on their investments, despite the pandemic.
Save for retirement
While trying to cope through this pandemic, retirement may be the last thing on your mind. However now more than ever we need to realise anything can happen that completely flips our plans upside down throughout no fault of our own. Even a small amount into our retirement plan or superannuation will make a big difference down the track when we plan to retire, so don’t let this pandemic affect more of your future than it has already. Especially if you have been stood down without pay or made redundant, as zero deposits are being made into your superannuation, which is a scary thought for all those Australian’s come retirement.
Helping you set and achieve your goals
A financial adviser can help you set financial goals so you feel confident that your future plans are achievable despite this covid19 set back. If you’re not on track to achieving your goals, an adviser can help you put the right strategies in place, or help you to set more realistic goals. We are always available if you ever have any questions, please don’t hesitate to contact us here at Smart Financial Advisory and stay safe!