The glow of New Year’s fireworks may be a distant memory, but there’s another new year coming up that for many of us is more important. That’s right, the new financial year is fast approaching, and now is the perfect time to get your finances in order.
Below are our tips to hit the ground running and get the most out of your hard-earned cash.
Time to plan
The new financial year presents a terrific opportunity to re-valuate your goals and aspirations as they may have shifted over time. Take stock of where you are now and start making a plan to work towards where you want to be.
Preparing a budget
Why not sit yourself down and make a budget for the next twelve months? To get started add up how much you spend during an average month. Then check your net income, including any income from investments or interest earned. Subtract the amount you spend from your overall income. This is the amount you are left with to put towards clearing your debts or increasing your savings.
If you’re not happy with the amount you are able to save, take a look at your spending and see if there are any areas where you could cut back.
It’s a good idea to set tangible deadlines. Give yourself realistic dates to meet certain goals, and work in some ‘rewards’ for doing so. Making small sacrifices now can make a big difference later.
Topping up your superannuation
On July 1st 2018, super laws are changing to encourage empty nesters to downsize. Those over 65 who meet the eligibility requirementsi will be able to contribute up to $300,000 from the sale of their primary residence towards their super, without that money counting towards their contribution caps. The great news is both members of a couple are eligible, meaning you could add up to $600,000 to your combined nest egg from the sale of one home.
Even if you’re not considering downsizing there are still plenty of opportunities to make an after-tax contribution towards your super, or to take advantage of government contributions for low-to-middle-income earners. For example, if you have earned less than $36,813 during the 2017-2018 financial year then you may be entitled to a government co-contribution for any after-tax contribution you make.
Review your insurance
Over the past financial year your financial circumstances may have changed and now might be a good time to review your personal insurance needs to ensure you have the right cover to give you and your family peace of mind.
Life insurance today is not a one-size fits-all solution and you can tailor your insurance cover is to your lifestyle so look at your policy and see if it still fits your needs.
One thing to look at is how much debt you have – over time it may increase or decrease so a regular review will make sure you’re not underinsuring yourself or, conversely, paying for cover that you don’t really need.
It’s also a good idea to allow for future financial responsibilities, not just the ones you have currently. For example, consider your child’s long-term education needs or your spouse’s upcoming retirement.
Sometimes we all need a little push to do the things we’ve been putting off, and June 30 presents a perfect deadline to make some new financial year resolutions.