Tuesday, 25 October 2022
Tonight’s Federal Budget is a timely reminder for Australians to do a health check on their personal finances as global economic headwinds continue to have a significant impact domestically.
Aware Super’s Group Executive Advice, Sarah Forman, said that just as the Federal Government was updating its financial strategy to account for changes in the economic landscape, it was important households also adjusted to shifting circumstances.
“The release of a new Budget is an ideal time to revisit your personal finances,” Ms Forman said. “For many Australians there will be measures in the Budget that have a direct impact on your own financial wellbeing – or that of your household.
“It’s important to know which measures will affect you and your family, and it’s especially important to be clear when those measures will come into effect. Every new Budget is also a reminder of the importance of planning and agility – adjusting your plans as your needs change.”
That was especially important at the moment, given Australia’s latest inflation projections and other concerns affecting the global economic outlook, Ms Forman said. She said the uncertain global economic outlook was particularly unnerving for people approaching retirement.
“For retired Australians, or those who are nearing retirement, economic uncertainty and market volatility like we’ve seen this year can be particularly disconcerting. One of the things that can help give you more confidence during these periods is a detailed financial plan that’s focused on helping you achieve your personal goals.
“Whether you are making big life changes, or getting close to retirement, talk to a financial advisor as they will help break it down and provide you the clarity and confidence to get you and your budget back on track.
“If you’re not ready to talk to a financial planner about planning retirement, most super funds should have a financial advice service you can talk to for no additional cost – it can be worth getting in touch to discuss things like options for how your super is invested.
“Even if you don’t have a financial plan, you can start out by taking a few easy steps that can help give you greater clarity about your finances, and hopefully a bit of confidence to help you make some thoughtful decisions to improve your personal situation.”
Aware Super’s financial advice team has provided the following tips to help you start your own personal financial health check:
- Track your numbers
Start your own budget and track your inflows and outflow. If you can measure it, you can be aware of it, and this can help you identify realistic financial goals – whether that’s dealing with cost-of-living pressures, planning a holiday or budgeting for your retirement income. Most banks allow you to download your account transactions into a spreadsheet to help you map this out, and there are also many apps readily available to help with this process.
- Map out your cost of living
Cost of living was a major theme in tonight’s Budget – and it’s pivotal to your budget as well. Scrutinise your expenditure – paying close attention to your subscriptions, utility providers and insurance policies – and use comparison websites to see if you can get better terms. If you’ve subscribed to a streaming service just for one series, consider cancelling it for a few months until the next season is due for release.
If you reduce your spending, you can direct the savings to paying down your debts faster or other expenses where you may have less flexibility, such as school fees. Consider adding to you super to help maximise your retirement income
- Reitre your debts
Once you have a handle on your expenses, analyse your debts and focus on paying down those with the highest interest rates. Often these will be credit card debts and personal loans. If you have a mortgage and you’re ahead on your repayments, consider talking to your bank about refinancing your debts. You may be able to consolidate them to rid yourself of high-interest loans and simplify your repayment schedule to one regular payment to your bank. This will give your more clarity and confidence and help reduce any anxiety you may be experiencing.
- Look at the big picture
Think about when you would like to stop working and factor in big-picture milestones, like paying off your mortgage, and aspirations, such as a round-the-world holiday. Making small increases to payments, like an extra $10 or $20 a fortnight to your mortgage, has a big impact over the long term. The Moneysmart website has a mortgage calculator that can help plan such payments.
- Get professional help
Super funds such as Aware Super offer support ranging from general advice at no extra cost to personalised advice for a fee for more complex situations. Professional advisers can help ensure you have the best financial strategy in place for your circumstances, taking the stress out of your path to and through retirement
Any advice contained in this communication, is general advice and not personal advice. Before making a decision about Aware Super, seek professional financial advice, consider your own circumstances and read our PDS. Call us or visit our website for a copy. Issued by Aware Super Pty Ltd ABN 11 118 202 672, AFSL 293340, trustee of Aware Super ABN 53 226 460 365. Financial planning advice is provided by Aware Financial Services Australia Limited ABN 86 003 742 756 AFSL No. 238430, which is wholly owned by Aware Super Pty Ltd. Read their Financial Services Guide before making a decision.