The lunar new year is a time for celebration. It’s also a good time to sort out your financial plans for 2022.

If you’re not sure where to start, here are five tips from some of our financial advisers to help get your super, mortgage, investments, insurance and savings all purring along nicely in the Year of the Tiger.

1. Don’t get mauled by your mortgage

The new year is a good time to look at your debt situation. How much do you owe and what might a rate rise do to your monthly mortgage? What other debt are you carrying? Do you have a buffer if things get tougher? It’s always good to review your debt and rein it in where you can.

One thing you should keep in mind is how your thinking might be affected by a thing called recency bias. If you’ve done well recently, those positive outcomes can bias your thinking and give you a sense that your good fortune will go on and on. But will it? Interest rates have stayed low and house prices have kept climbing, but will that continue indefinitely? History says no.

If things change, how will that change your ability to repay your debts? According to Roy Morgan Research, mortgage stress in Australia during the GFC was about twice as high as it has been during the pandemic. In September 2021 their research indicated that 18.3% of mortgage holders were considered to be ‘at risk.’ In 2008 that number was 35.6%. What will it take for those numbers to return?

With the real estate market running hot, and interest rates at all time lows, Australians seem to be happy to borrow from the banks to fund a property purchase or a major renovation. But will the boom continue, and will the banks keep lending money so cheaply? With inflation starting to play a role in the economy, it’s not a matter of whether rates will rise, it’s a matter of when.

Ben Greenwell ^CFP
Elston Gold Coast

2. Nip away at your bad money habits

We’ve all got bad money habits, but we don’t really know exactly what they are or what damage they’re doing, until we do a budget. Yes, a budget. Sounds boring, doesn’t it? But trust me, once you get into it, you’ll soon see how exciting it is.

Write down what you earn each month. Then list all your expenses, including your Netflix subscription and your morning coffee on the way to work.

Now look at how well your numbers sit with the 50/30/20 rule. This rule says you should be aiming to allocate 50% of your income to needs, 30% to wants and 20% to savings and servicing your debts.

If your figures are out of step with the 50/30/20 rule, spend some time looking at how you might be able to get close. Don’t be too tough on yourself. It’s important to leave some wriggle room, just in case surprise expenses pop up.

Putting pencil to paper is powerful. So grab a pencil and get 2022 off to a great start. You’ll be able to work towards saving goals and see how you can change some of the small spending habits that are undermining your objectives.

Damon Bensein ^CFP
Elston Brisbane

3. It’s a jungle out there. Stay on your path.

Staying on your investment path isn’t always easy. Especially if you’re trying to do it all on your own. If you don’t have a financial planner you can easily wander off in the wrong direction, get stuck in one spot, or perhaps even go backwards.

A good financial adviser will get to know you and understand your goals. They’ll map out a plan that can help you achieve those goals. And they’ll guide you along the way, checking in on your progress and suggesting ways that you might adjust your investment strategy as your situation changes.

Some people shy away from talking to a financial planner because they think it will be expensive. But it doesn’t cost anything to ask. In fact, if you approach Elston, the first consultation is at our cost and there’s absolutely no obligation to proceed.

Andrew Rosetta ^CFP
Elston Canberra

4. Realise you don’t have nine lives

Cats may get nine lives, but people only get one. This means that, even though you might be feeling bullet proof right now, you’re most definitely not.
Insurance is something a lot of people hate to think about, but they really should. Especially if you’re getting married, buying a home or having a baby.

To many, life insurance and income protection cover are grudge purchases. And yet it’s the foundation of your wealth plan. It underpins your income, your mortgage, your kid’s education. If something were to happen to you, who would cover the home loan? Would you family’s lifestyle be compromised?

Having the right insurance is vital for anyone who is self-employed. And as your business grows, life insurance takes on even greater importance for you, your family and the other stakeholders. If the business loses a key person, how will that effect future earnings? If the business is carrying debt, how will it be met?

Australians automatically insure their cars and their homes, but they sometimes hesitate when it comes to covering themselves. If you’ve held back on reviewing your insurance, make this the year you talk to a specialist. Getting the right advice will not only give you peace of mind, it could even save you money.

Troy Pearsall ^MFinPlan
Elston Wealth Protection

5. Get your self managed super fund purring

Lots of Australians have self managed super funds (SMSFs). According to the ATO, there were 597,900 SMSFs as at June 2021.

SMSFs are extremely popular with investors who want to have more control of the assets that are held in their super. Some people make all the investment decisions themselves. Other prefer to work with an investment adviser. The advantage of this second approach is that you get specialist expertise. It also means that you’re less likely to fall prey to personal biases.

Following a disciplined investment process is important. You want to know that your portfolio is balanced and that the assets have been selected on the basis of solid fundamentals. It’s also good to know that in times of market volatility, there’s a team of experts moving quickly to adjust your portfolio to ensure your asset allocation stays in balance, and you’re in a position to take advantage of an upswing.

Brett Ulrick ^CFP
Elston Ballina

We trust these five tips have got you thinking about ways that you can improve your finances in the Year of the Tiger.

If you’d to talk to someone about the next steps you could be taking, feel free to reach out to one of the experienced financial advisers at Elston.

We think Elston is about the right size. Small enough to be client focused. Large enough to be stable and strong. Elston is one of Australia’s largest privately owned and operated financial services companies. We have offices in Queensland, New South Wales and the ACT and $3billion in funds under management.

We also offer a range of specialised services, everything from philanthropy to insurance, business succession and self managed super funds. So even if retirement is a long way off, there’s a lot you could be doing now to get your finances purring. Give us a call on 1300 ELSTON. We’re here to help.