Spring Clean your Finances… Replenish and Revitalize your Money
Nothing about money is set and forget. Whether your finances include a budget, savings, loans, insurance, super or more, from time to time you need to pull these things out, dust them off and see if they need a freshen up. Here are our tips on how to rejuvenate your financial affairs this Spring.
- Freshen up your mortgage
- Put a spring into your savings
- Reassess your home and contents insurance
- Whip your personal insurance into shape
- Blow the cobwebs off your super
- Rejuvenate your budget
Freshen up your mortgage
Interest rates have been coming down so you need to check if you are still getting a competitive rate. A lower interest rate can mean you’ll pay off your loan a few years earlier. Find out what your current interest rate is and take note of the loan features you want to keep, such as an offset or redraw facility. Compare your loan to other loans on the market to see if you can get a better deal.
Approach your current lender and tell them you are thinking of switching your mortgage. They may offer you a better deal to keep your business. If not, use ASIC’s Money Smart’s mortgage switching calculator to see how much better off you could be switching loans. Mortgage Switching Calculator Smart tip: If you make the switch to a cheaper loan you should continue with your current repayments so you save interest and pay off your loan sooner.
Put a spring into your savings
While mortgage rates have been coming down, some banks and credit unions have increased their savings and term deposit interest rates. Check the return you are getting on your savings and see if there are other financial institutions offering better rates. Also reconsider the type of savings product you have. For example, if you have a term deposit that’s about to mature and you find an at-call savings account that is paying higher interest, ask yourself whether a term deposit is the right account for you.
Alternatively, if you have money in an ordinary savings account but term deposits are paying higher interest, see if you can lock some savings away to get a better return on your money. Your choice of investment needs to fit in with your needs and goals but there’s no harm in shopping around to get a better deal for your cash.
Reassess your home and contents insurance
We all buy items for our homes from time to time, like appliances, furniture, TVs and electronic equipment. How long since you estimated the cost of replacing the entire contents of your home? Is your current contents insurance enough to cover what you have? If you are a homeowner, you should also re-evaluate the cost of rebuilding your home. This is especially important if you have completed any extensions or renovations since taking out your home insurance policy.
See ASIC’s Money Smart’s Home and Contents Insurance for details on how to go about recording and updating your home or contents insurance policies.
Whip your personal insurance into shape
If you couldn’t work for a long period of time due to illness or injury, would you still be able to cover all of your living expenses? If not, Income Protection Insurance may help. Check if you already have income protection cover through your super fund or another insurer and see if it is enough.
We all love to get a pay increase, but is your income protection insurance keeping up with your pay? Most income protection policies are based on a fixed income amount. Cover won’t automatically increase when your pay does. If you want your income protection insurance to reflect your actual pay, contact us today to find out your options.
Blow the cobwebs off your super
You might not see super as ‘your’ money because you can’t access it until you retire, but the reality is that it is very much your money and it’s going to come in pretty handy when you retire. To get to know your super better, find your latest super statement (it could be hiding in your email inbox or in your filing cabinet) and have a good hard look at it.
Here are some things to check:
- Multiple super accounts – If you have more than one super account consolidating your accounts will save you fees and make it easier to keep track. Check for any insurance inside super first and seek financial advice before making any changes.
- Investment options – Think about the best investment option for your stage of life when choosing your super investments. If you’re more than 10 years away from retirement, a more aggressive investment strategy is likely to deliver higher returns. If you are closer to retirement think about more conservative options to protect your capital.
- Contributions – The sooner you start contributing extra to super the less you have to give up each week to make a difference in the long-term. Lower income earners may be entitled to a government co-contribution. Mid to higher income earners may be able to save tax.
- Personal details – If you’ve moved house or changed your phone number or email address, your super fund may not know how to contact you. Keeping your personal details up to date will make sure your money doesn’t end up in lost super.
Rejuvenate your budget
When you’ve finished giving the rest of your finances a good spring clean, it’s probably a good idea to update your budget. Your income and expenses change over time so keeping your budget up to date will allow you track what you’re spending and calculate how much you can save towards your goals. ASIC Money Smart’s budget planner is a good tool to use to start creating your budget. Budget Planner. ASIC’s Money Smart also have apps to help you Track Your Spending and Track Your Goals.
You work hard for your money, so make it work hard for you. Spring clean your finances, look for low interest rates on your mortgage and high interest rates for your savings. Keep on top of your insurances and know where your money’s going so you stay in control.