It’s always a great time for making lifestyle changes and reviewing where you’re at, but for goals and changes affecting your financial health, there’s often no better time than when starting a new job. New beginnings right?
Well 2022 has to be better than the last two years, right? With everything that has been going on, you may have not had the time or motivation or head space to get your financial affairs in order because life has been all about survival. With a fresh eyes and outlooks, come new opportunities to get your finances in order and feel comfortable with the knowledge that you are getting professional help to make the most of your hard-earned dollars. Call it ‘getting your ducks in a row’ or finally filing the ‘too hard basket.’
Okay… we may be on the brink of nuclear war and are finally wrapping up a pandemic, but hey… is there ever the perfect time?
Plan around your pay cycle
If your job pays fortnightly, there is a great opportunity to modify your mortgage repayments. Paying half your monthly mortgage as a fortnightly repayment lets you squeeze in one extra monthly repayment each year – potentially saving thousands in interest over the course of a loan. Cool right? And you can always lower payments back to the minimum if there’s a squeeze on.
Don’t waste a pay rise!
If you received any sort of pay increase in 2021, or you are starting a new job in 2022 with a higher salary, there are opportunities to save more while maintaining the lifestyle you’ve become accustomed to. One of the most tax-effective investments is making additional concessional contributions into your super. Using your before-tax pay, it’s usually taxed at just 15 per cent instead of your marginal tax rate.
Individuals may contribute up to $27,500 during 2022/23 as concessional contributions to super and in turn reduce your taxable income.
As you move through your career, priorities change and with a mortgage and children comes the need to protect your income. The new year is a good time to sit down and check your insurance – inside and outside of super – and make sure it matches your financial situation and your current lifestyle needs.
Check your budget
You may have been living on a more frugal budget the last two years if you have had a downturn in employment due to COVID, and your expenses may have decreased as we have not been able to travel, eat out, participate in sports and hobbies. Your income and expenses going forward are likely to change. A financial adviser, counsellor or money coach can help you set a budget based on your 2022 salary and expected expenses. They can also discuss investment strategies to ensure any surplus finances gives you a boost today, and in the future and work out just what your priorities should be.
Get your superannuation on track
With many people predicted to have more than 10 jobs in their lifetime, having a super fund that can move with you from job to job and into retirement has never been more important. After all, losing track of just one super fund can cost you thousands of dollars in fees by the time you hit retirement.
Not all super funds can do this though, and once you’ve done your homework to find the fund that best suits your investment profile and insurance needs with fees you are comfortable with – it’s often a good idea to stick with it.
This gives you peace of mind throughout your working life that your retirement savings won’t get lost and you won’t be paying unnecessary tax and fees when the time finally comes to retire. And it can be just like a little lost puppy, always following you around.
A Financial Adviser can talk you through some superannuation fund choices and how to go about consolidating your superannuation accounts to take advantage of the benefits of having one, rather than multiple accounts.
They can also talk to you about the benefit of having multiple accounts – it doesn’t suit everyone, but there are a few that are better off with more than one super fund, under the right conditions and depending on your own personal circumstances and health.
For help with your 2022 financial plan including super, savings and more, contact your Financial Adviser today.