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!
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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?
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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.
10 WAYS TO DO MONEY DIFFERENTLY IN 2022 By Helen Baker
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7. SAVE SURPLUS CASH
Anyone able to keep working during lockdowns likely saved money – lots of it. All those meals out with friends, 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)
20 Peninsula Kids – Autumn 2022
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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.