Personal trainers will tell you that the key to being fit is by developing everyday good habits with exercise and diet that can make a big difference over the long term.
The same kind of focus on money matters can leave you in great financial shape too. So when it comes to your financial fitness, are you pumped or a candidate for The Biggest Loser?
Take our fun test to find out…
The last time you did a personal financial review or a budget was…
a. Last year when you filed your tax return ahead of the end of financial year?
b. Sometime in the last few years when you were trying to reach a financial goal like saving for an overseas trip or buying a house?
c. When you decided to get on top of some of your debt?
d. What’s a budget?
If you answered c or d, start a financial workout routine
You won’t get financially fit without covering the basics. Start with a budget. Monitor your spending habits, halt unnecessary costs, start to pay down debt and create a savings plan. You’ll begin to see the results immediately.
Your financial goals include…
a. Being financially sorted and buying somewhere, sometime in the near future?
b. Buying a new pair of the latest Jimmy Chu's?
c. A tailored strategy that you put together with financial advice?
d. Short, medium and long term targets?
If you answered a or b, get your financial fitness program together
Your financial fitness program is a long-term strategy - so not something you’re going to give up on in a few months (like going to the gym). It should also involve interim targets that pave the way for the bigger plan. Set small goals that you won’t be overwhelmed by, for example paying off your credit card, or starting to save for a car.
You have enough savings to survive without working for…
a. At least a year?
b. Four weeks at most?
c. 3-6 months at a push?
d. You can barely make it to pay day without having to live on packet noodles?
If you answered b or d, start to create a financial safety net
Most experts say you should have at least 3-6 months savings in reserve as a safety net. Set up a direct debit from your bank account so you can save to a high interest account every time you get paid, so you have a buffer if you can’t work for any reason or have unexpected expenses.
a. How you feel when the sales are on?
b. One of the most important investments you may have and you contribute extra into it each pay because you want to have an awesome retirement?
c. Something you know is important but you feel you can wait until you’re older to take it seriously?
d. Complicated and you couldn’t honestly say where yours is?
If you answered a, c or d, then sort out your super
Increasing contributions to super can be a great strategy to grow long-term wealth and may also reduce your tax bill. Tax concessions and limits apply to superannuation contributions, so have a talk with your accountant or financial adviser to work out an effective plan for your long-term goals.
You have insurance for…
a. Everything that’s important to you?
b. Some things like car and health insurance but you resent how much it costs?
c. Just your car: You know other types of insurance are important but you never get round to sorting them out?
d. Nothing: Insurance is a waste of money?
If you answered c or d, then it's time to prepare for the unexpected
Whatever the make-up of your assets, making sure you have the right insurance can be crucial for their protection. Do you have landlords insurance on your investment properties? Does your home contents insurance reflect their current value?
The best way to determine whether the insurance is adequate and up to date is to speak with a financial adviser and your insurance broker.
You last took financial advice from…
a. A professional adviser or financial organization?
b. Your parents or friends?
c. An article or book you read?
d. The guy at the bar who offered you some investing tips which didn’t turn out the way you hoped.
If you answered b, c or d, get your info from a pro
Growing wealth, investment strategies, property portfolios, tax structures – all of these finance subjects and more require specialist information and knowledge. You wouldn’t go to someone who didn’t know anything about fitness to be your personal trainer, so make sure you’re getting your financial advice from an expert.
Disclaimer: This is not financial or professional advice. We recommend you obtain independent advice before making any financial decisions.