13 June 2013 Give yourself a financial health check as tax time approaches

Tax time is approaching and many readers will be digging out their paperwork, putting their finances in order. Why not use this time to give yourself a financial health check?

Here are some questions you need to ask yourself:

Home Loans
Have you reviewed your home loan in the past 12 months? There’s a spread between standard variable mortgage rates of around 5-6.2%. That’s a potential repayment difference of around $235 a month on a $300,000 mortgage.

Are you getting the features you need and avoiding paying for the features you don’t use? Do you need a credit card or an offset loan? Check you are paying fortnightly – this will pay off your loan faster.

Are you appropriately covered? Take a look at your home and contents – what would it cost to replace your belongings if something went wrong?

What about life insurance? You want to make sure all your debts are covered and your family has enough to live off in case something happened to you. It’s worth also looking into trauma and/or income protection cover in the event of an illness or accident.

If you had to stop working, how would you pay your household bills? If you don’t know what you need, engage an adviser to help you get the best premiums and ensure you’re adequately covered.

Do you know how much you have in savings? Do you have a plan for it?

Cash is valuable and you can’t let it be eaten by inflation. Review the interest rates you are paid and compare it with other products, whether they are savings accounts or term deposits. The comparison sites are excellent for this.

Do you know how much you have in super and how it’s performing?

Go to your account and see how much you have, and what it is returning. Also, look closely at what fees are coming out: super funds vary in their overall fees by a factor as large as 2 per cent per year. Even if you go to a fund charging 1 per cent less than your current fund, the difference – over 30 years – adds up to tens of thousands of dollars. Small differences in fund performance produce big results in the long run, so spend some time selecting your investment options.

Match volatility to your risk profile and life stage. Have a look at your original goals and assumptions: are they real? Do you really know how much you’ll need to live well in retirement?

Household costs
How much are you paying just to live? Review your telephone packages, your internet, your electricity/gas account and your petrol bill. By simply reviewing these household overheads, most people can save over $100 a month, which could be put to good use on your loan or in your super.

You won’t regret making this a habit. Remember, that a dollar saved is better than a dollar earned – you don’t pay tax on it.

Reproduced in full with permission: Property Observer Give yourself a financial health check as tax time approaches 3 June 2013

Attention: This article is intended to provide general information only. Every attempt has been made to ensure the accuracy of this information at the date of publication. The opinions expressed in this article do not reflect those of DHA, its staff or agents. Property prices are subject to fluctuation. Prospective investors should seek independent advice. DHA will not be liable for any loss, damage, cost or expenses incurred or arising by reason of any person relying on information in this article.