Top 5 tips to be financially healthy, wealthy and wise
<p><strong>Financial health, wealth and wisdom aren’t exclusive to the billionaires of the world – every Aussie can use these tips to live happier and more secure lives.</strong></p>
<p>The old saying goes ‘Early to bed and early to rise, makes a man healthy, wealthy, and wise.’ I believe this refers to more than just sleeping habits and speaks to the importance of a good routine and planning ahead. ith that in mind, here are some tips to ensure you and your bank balance remain on good terms:</p>
<p><strong>1. Build strong foundations</strong></p>
<p>There are five financial foundations I recommend which form the building blocks for a strong relationship with money:</p>
<ul>
<li>Emergency fund</li>
<li>Spending and investment plan (more in-depth than a budget)</li>
<li>Superannuation</li>
<li>Adequate insurance cover</li>
<li>Estate planning</li>
</ul>
<p> </p>
<p>Having these foundations in place allows you to build wealth to enjoy a good lifestyle, protect you and your family against any unexpected disaster or loss of income, and plan for a comfortable retirement.</p>
<p>The earlier you put them in place, the more time you have for them to work in your favour (think back to your schooldays about the benefits of compound interest!)</p>
<p><strong>2. Take charge – it’s YOUR money</strong></p>
<p>Do you know your current superannuation balance? The interest rate on your mortgage? How much you spent last month?</p>
<p>Many people don’t – often because they leave the finances up to their significant other. It’s a risky move.</p>
<p>What if your partner invests unwisely? Develops a gambling addiction? You split up?</p>
<p>Sadly, many people have faced financial ruin simply because they wrongly believed their partner had everything hunky-dory.</p>
<p>It’s important to be actively involved in your finances – know where your money comes from and where it goes. Don’t just leave it up to someone else, no matter how much you may love them.</p>
<p><strong>3. Avoid runaway debt</strong></p>
<p>Unpaid bills, late tax returns, missed Afterpay instalments and credit card repayments – they all accrue interest and can quickly snowball until you’re buried under an avalanche of debt.</p>
<p>Find ways of managing repayments that work for you. That could be:</p>
<ul>
<li>Setting reminders in your phone and/or on your fridge to pay bills by their due date. </li>
<li>Using a mortgage offset account to reduce your payable interest.</li>
<li>Paying with cash/debit rather than credit/buy-now-pay-later (convenience typically costs more than transparency).</li>
</ul>
<p> </p>
<p>If you’re struggling, tackle your most expensive debts first (those with the highest interest rates).</p>
<p>You may also be better off consolidating your debts into one, such as your mortgage – to pay less interest overall and to cut the number of repayments to keep track.</p>
<p><strong>4. Don’t ‘set and forget’</strong></p>
<p>Your income, expenses, debts and taxes all change as your life and circumstances change, meaning they should be reviewed regularly.</p>
<p>Update your spending and investment plan whenever you change jobs, move house, expand your family, get a payrise etc.</p>
<p>Scrutinise your expenses to cut wasteful spending – like that gym membership or TV subscription you no longer use.</p>
<p>Examine ways to reduce your taxable income throughout the year, such as extra contributions to your super and keeping records for allowable deductions.</p>
<p>Beware the ‘loyalty tax’ – banks, utilities and insurers typically offer better deals for new customers than existing ones. If you don’t review those at least once a year, or simply pay the renewal without comparing, you’re probably paying more than you need to. (If you do switch providers, double check that you are getting a like-for-like service – read the fine print carefully.)</p>
<p><strong>5. Look after yourself</strong></p>
<p>‘What does self-care have to do with money – apart from costing lots?’ I hear you ask.</p>
<p>My response is – who can really afford to be sick given how fast healthcare costs keep rising! Not to mention lost earnings and other impacts.</p>
<p>Looking after yourself – physically and mentally – means you’re less likely to need to pay for medical care, treatments and medications. Plus, you’ll need less sick or unpaid leave from work. And you’ll reduce your chances of a debilitating condition which could cut short your ability to earn a living, such as a stroke or heart attack.</p>
<p>Then there’s the benefits of better cognitive function – making smarter decisions about money and better productivity at work (increasing your prospects for promotions and higher incomes).</p>
<p>Invest in self-development too. Learning new skills and gaining extra qualifications aren’t just good for mental health but help you earn a higher income.</p>
<p>Hence looking after yourself means lower costs AND higher income. What’s not to love about that?!</p>
<p><strong>Helen Baker is a licensed Australian financial adviser and author of the new book, <em>On Your Own Two Feet: The Essential Guide to Financial Independence for all Women</em> (Ventura Press, $32.99). Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at <a href="http://www.onyourowntwofeet.com.au/">www.onyourowntwofeet.com.au</a></strong></p>
<p><em>Image: Getty Images</em></p>
