I’m guessing you didn’t celebrate the start of the New Financial Year, as I did – that’s really the preserve of the money nerd. But you don’t need champagne to suffer a hangover from 2014/2015.
A whole new year may require a whole new strategy to protect and provide for your family. At the very least you need to review and probably revamp your existing one. Here’s my five-point checklist to make 2015/2016 safe and successful.
Step 1: Tackle your tax. And I don’t mean just file it
It’s very possible that last year your family paid too much and if you don’t do something about that today, you’ll do it again. Plan to mop up ALL possible deductions this year; there are some wacky ones – like Foxtel for journalists and even knives for knife swallowers! Check your industry here. Get your log books for driving between jobs or clients sorted now – here’s what you need to know. And if you were slugged with the Medicare Levy Surcharge last time around, buy private health insurance to actually get your family covered for that cost. Due for a big refund from the Tax Office? Then also complete a PAYG withholding variation application to keep this for your household to use throughout the year rather than issuing a no-interest loan to the ATO.
Step 2: Hone your house insurance
I can’t stress enough how important it is that you keep your home and contents insurance up-to-date. Your home is probably your most expensive asset and you need to be sure you could rebuild it if destroyed (and your family would be rehoused in the interim). So you need a policy that covers you for emergency accommodation and the costs of demolition, approvals and rebuilding. But you usually tell your insurer how much this will all cost and 83 per cent of homeowners believe they’ve underestimated. Check-in with your insurer today about the valuation of both your house and contents. Renovated recently? That’s maybe $50,000 added to your house value. Bought a pool table? That’s perhaps $5000 extra contents. These calculators can help you avoid being underinsured. And a vital footnote on contents insurance: most of them have the added benefit of including public liability insurance that applies outside the home. Otherwise an accident you cause, say, on the golf course could bankrupt you. More info here.
Step 3: Sort your super
Two external factors mean the difference between a grim or glam retirement: fees and returns. Actually read your annual superannuation statement when it arrives and, if you are in the balanced fund, check you paid fees of less than 1.3 per cent and earned returns of more than 12 per cent a year over the past three years (one year is too short to accurately judge). If not, switch to a better fund before your balance suffers. There is also a factor entirely within your control that holds massive sway over your super stash: how much you contribute. A mandatory 9.5 per cent is paid in for you but virtually every expert agrees this is not enough, especially for women who earn less and/or take career breaks. Jump on this excellent calculator to project how much (or how little) you could end up with and the difference even small extra contributions starting this year would make. Finally, check any life and total & permanent disability insurance included with your super scheme. Would this fund your family (and repay your debts) were the worst to happen? Buy more – in or outside of super – if not.
Step 4: Slip slop slap
OK I know that’s old school but to me this is what the types of general insurance we haven’t yet talked about do for you – prevent you from getting burnt. Here’s a list. So are you covered for everything else that could fry your family’s finances? Think car, motorbike and scooter, caravan, boat, landlords and renters, and travel insurance. Replacing or repairing your possessions, or recovering unexpected costs from mishaps overseas, is expensive. And don’t forget business insurance if it applies.
Step 5: Build that Holy Sh*t fund!
You. Need. Six. Months. Worth. This is your cushion if life, as it so often does, throws you a curve ball. Being able to instantly access emergency cash will let you – and your family – sleep soundly this (new) year.
