BY CANNA CAMPBELL
The decision to make any change or improvement in our lives is a powerful and exciting one, with positive and liberating benefits to follow and flow into various components of our lives. Making the empowering decision to take control of our personal finances and build financial wellbeing is definitely one to be embraced after a tough 2020.
To help make sure that we take the right action, hit the ground running and know exactly where to start and what to prioritise, I am going to tell you what has personally worked for me as well as potentially thousands of others as they efficiently and effectively experience major shifts and changes in getting their finances sorted.
- Have a budget – we all need to have a budget – not to constrain our lifestyle but to understand where our previous hard-earned money goes and take back the control, so that it is no longer wasted but instead, redirected to what we place a higher value on.
- Have financial goals – your first goal could include getting better at managing any outstanding debt in your life. This may include credit cards, personal loans and to a certain degree, student debt. When you do this, you not only feel more in control of your cashflow and budget, but you clear the path for more exciting and powerful financial goals to be included in your life. Such as saving for your first home or investment portfolio, which you can now hopefully achieve more efficiently as you don’t have the drag and drain of debt repayments anymore.
- Emergency money – everyone needs emergency money, regardless of their financial situation. Having the right amount of emergency money is going to differ from person to person, so you need to look at your own individual circumstances and work out the financial cost of what could realistically happen to you. This may include losing your job, unexpected medical or dental bills, car issues etc. Add up the cost of these to give you a clearer idea of how much you need and then start saving.
- Superannuation – as you work on your financial goals, whether they be starting your budget or building your emergency money, this is the perfect opportunity to sort your superannuation accounts out. Ideally you should have only one super account, (to save on fees and expenses) and that money should be invested towards your own long-term financial goals. Start with a risk profile, and make the necessary changes to your investment choice. Once this is set up, enjoy having a lot more peace of mind knowing that your financials are starting to line up correctly. Also, be very careful when consolidating your super, you don’t want to accidentally cancel any personal insurance, such as Life cover or Income Protection as this may be valuable to your overall financial wellbeing. There are other fees and expenses to be aware of when you look to consolidate your superannuation such as tax, brokerage, buy/sell spreads and natural market volatility whilst you are out of the market when your funds are being rolled over. So if in doubt, always contact a licensed and qualified Financial Planner, who can give you personal product advice, based around your own needs, goals, situation and time frames.
- Protect – to help minimise any financial damage from a medical misfortune, it is important that you have some form of personal insurance protection in place. This goes beyond private health insurance as it helps protect our financial wellbeing – what we have created thus far and what we are planning on achieving. Personal insurances include life and TPD cover (Total and Permanent Disablement), Income Protection and Trauma cover. The first three policies can quite often be owned and paid for via your superannuation, so it is worth looking into these policies when cleaning and setting up these accounts. However you never want to roll any old superannuation accounts over until you have the replacement cover accepted and in force with no new loadings or exclusions. Otherwise you may have to have two superannuation accounts.
- Build – once you are debt free, have your emergency money established and know that your super and insurances are correctly in order, you can start to work on fine tuning more financial goals for yourself, which may include saving up for your first home, adding to your super so that you help build greater certainty about your retirement or even begin your investing journey as you start to build your own passive income.
At the end of the day, when you make that decision to take control of your financial future and start sorting out your finances, you instantly feel inspired and re-energised as to what you can do, learn and achieve, once you put your head, heart and mind to it.
Canna is the founder of the financial media platform, SugarmammaTV, and author of financial advice books The $1000 Project and Mindful Money. She comes from a corporate finance background and is a licensed financial planner. SugarmammaTV provides educational content that helps make money and finance more approachable. She is also the founder and director of financial planning firm, SASS Financial Services.
This article was prepared in partnership with ING. The information provided in this article is of a general nature only and does not consider your personal objectives, financial situation or particular needs. The views expressed in this article are provided independently by Canna Campbell, a Financial Planner and an Authorised Representative of Wealthstream Financial Group Pty Ltd (AR 000309372) featured in the article. ING makes no warranty as to the accuracy, completeness or reliability of the information, nor does ING accept any liability or responsibility arising in any way from omissions or errors contained in the content. ING does not recommend any products, services or financial strategies mentioned in this article. ING strongly recommends that you obtain independent advice before you act on the content. Canna Campbell uses ING’s trademarks under arrangement with ING. ING is a business name of ING Bank (Australia) Limited, ABN 24 000 893 292, AFSL and Australian credit licence 229823.
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