Much like our physical health, it can be prudent to check on our financial health and wellbeing at regular intervals.
Reviewing your financial affairs is especially important when there has been any significant change to your employment or lifestyle. Changes could be family related – like having children, children turning 18, re/marriage or separation – or work related – such as relocation, a new job, starting a business, new investments or retirement.
If any of these aspects of your life have changed, your existing financial arrangements may need updating and you may benefit from consulting a professional adviser.
Important items on your financial health checklist should include:
- Insurance – Do you have enough, or too much? Should the premiums or excesses be reviewed if circumstances change? Some common insurances would be life cover, income protection, health insurance and professional or public liability cover depending on occupation.
- Interest rates on borrowings – Banks will work hard to get new customers and attract them from other banks with low interest rates or competitive re-finance packages. This same effort is often not made with existing customers, especially the ones who don’t ask the question. Set and forget can be particularly expensive with mortgages and investment loans and even more so at the moment with lending rates at record low levels. An investment broker (such as Accru Financial Solutions) can help cut through the maze and find the right deal.
- Wills and estate planning – Some events like marriage or divorce can invalidate a will. Others should prompt review, including when children become legally recognised adults. Is the executor of your will still appropriate? Are there new family members who might be considered beneficiaries such as grandkids? Is it time to look at inserting a testamentary trust? Experience has shown that wills are the least likely to be reviewed with any regularity.
- Investment/business structure – Do you have too many entities, or should you be looking to establish one for the future benefit of your family? For existing ones, who are the key people, such as trustees or directors? Long term perspective is important here and two of the main considerations are tax implications, now and in the future, and asset protection effectiveness.
- Superannuation – How many funds do you have and have you checked the lost super register? If you’ve changed employers a few times then you probably have more than one, meaning you’re paying multiple fees. The ATO has recently stated that there is $14 billion in lost super waiting to be claimed. Is it time to consider the self-managed superannuation option? Should your existing self-managed fund look at a borrowing arrangement? The latter can be particularly effective for getting real property invested in the super environment. However caution must be exercised, as there are some aggressive and unscrupulous promoters targeting self-managed super investments at the moment. You may be interested in attending an Accru Melbourne SMSF Information evenings to help you decide if an SMSF is for you.
Much like your actual health, it is worth touching base with your trusted advisor from time to time for a financial check-up, even if you feel fine. Your local Accru adviser will always be happy to assist.