7 tips to make 2018 a financial success

By Liz Maroney, Westlawn Wealth Adviser
SMSF Specialist Advisor™
30 November 2017

This month has been very busy as we head towards the end of another year. I’ve been out on the road meeting clients across the region and I’ve also ventured further afield to visit clients in both Sydney and Brisbane. As I’ve spent so much time out of the office, I thought this would provide a timely opportunity to update an article I wrote earlier on 7 New Year’s resolutions for making the coming year a financial success.

1. Pay off your bad debts

There are 2 types of debt in this world: good debt and bad debt.

Good debt is used to purchase assets that are likely to earn income or appreciate in value over time. Examples of good debt include borrowing to buy your home or an investment property. Student debt is another example as it’s likely to increase your ability to earn more income in the future.

Bad debt, on the other hand, is borrowing to purchase goods that will decrease in value. Buying clothes on your credit card is bad debt. Borrowing to buy a new car that will depreciate as soon as you drive it out of the showroom is also bad debt.

These are the debts you should make a priority to eliminate or reduce as much as possible in 2018.

Start with debts charging the highest interest rates. This is likely to be credit card debt.

Once your credit cards are paid off, tackle the debt with the next highest interest charges.

If this seems like an insurmountable task, don’t be disheartened. Consider consolidating your debts into one personal loan with a lower interest rate. If you have a home loan, you may be able to consolidate your other debts into your home loan. Get financial advice first to determine whether this is an appropriate strategy for your individual situation.

2. Take a fresh look at your mortgage

When was the last time you reviewed your mortgage? Are you getting the best deal available?

During the year, competition in the home loan market resulted in lower rates for homeowners in the market for a new mortgage or for those switching lenders. Do you know how much you are currently paying? Could you also be getting a better deal?

A qualified Westlawn Mortgage Broker could help you secure a better deal.

Another way to save on your mortgage is to pay your mortgage fortnightly, or even weekly, instead of monthly. This will help to help lower your repayments over time. If you can afford to pay a little extra, even better.

3. Search for savings

Chances are there are savings we can all make, if we just make the effort.

Look for specials on fuel and fill up on low cost days. The Australian Competition and Consumer Commission (ACCC) publishes information on the petrol price cycles here.

Also, take advantage of shopper dockets and supermarket loyalty programs to get fuel discounts.

When grocery shopping, buy non-perishable items, such as tinned food, in bulk. This can dramatically reduce your household grocery bills.

Power bills seem to go up each year. To cut down on your energy bills, shop around for the best deal from energy providers eager for your business. Use a comparison website such as iSelect as a research tool. When you need to replace electrical equipment, go for the most efficient model with the highest energy star rating.

4. Save 10% of your pay for a rainy day

You’ve paid down your bad debts, you’re making savings on your groceries and you’ve lowered your energy bills. Now you find you have a little extra left over each pay packet.

Now’s the time to start a regular savings plan. Try saving 10% of your pay. Use direct debit to automatically deposit money into an online savings account that pays a higher rate of interest.

Alternatively, depending on the size of your mortgage, you may be better off using at least some of those extra savings to pay down your mortgage. Making a relatively small additional payment regularly now could reduce your mortgage significantly in the years to come.

Remember, it’s always a good idea to have savings for those unexpected emergencies – medical expenses, vet bills, a new hot water system etc.

5. Contribute more to your super

Make 2018 the year you take an interest in your superannuation. After all, how much super you accumulate throughout your working life will determine the lifestyle you can afford in retirement.

Start by looking for lost super and consolidating into your main super account.

Next, review your investment options. Are you investing appropriately for your life stage and the level of risk you feel comfortable with?

Also, consider contributing a little extra to your super. You can make additional personal contributions. Employees could also salary sacrifice into super which will also help reduce your tax.

Seek professional advice.

6. Review your insurance and give your family peace of mind

Have you reviewed your life insurance lately? Do you have adequate protection for you and your family in the event you suffer an extended illness, accident, disability or worse?

Changes to your personal and family situation could mean that your existing life insurance is no longer appropriate. If you’re having a baby, purchasing a new home or investment property, starting a new job, getting a pay rise, getting married … or divorced, you should seek professional advice on your personal insurance.

7. Get professional financial advice … and save

Finally, make 2018 the year you get your financial affairs all sorted with a comprehensive financial plan.

Doing so could really pay off. A 2011 KPMG study[1] found that:

“After allowing for the costs of obtaining advice, an individual with a financial adviser saves $6,370 over 2005-06 to 2008-09 or an additional $1,590 each year compared to a similar individual without a financial adviser.”

You can read more about the potential savings from financial advice in my earlier article: An extra $1,590 saved each year: That’s the value of advice.

And just last month, I shared more good news on just how much you could save by getting professional financial advice in How much is financial advice really worth to you? 

Make 2018 a financial success, contact us today:

Copyright © 2017

[1] Source: KPMG’s Value Proposition of Financial Advisory Networks, 18 January 2011

Westlawn Wealth Adviser, Liz Maroney is a ...

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Liz Maroney and Westlawn Wealth Management Pty Ltd ABN 32 124 861 409, Authorised Representatives of GWM Adviser Services Limited ABN 96 002 071 749, Australian Financial Services Licensee, 105 -153 Miller Street North Sydney NSW 2060.