We all know that the New Year is the perfect time to review your finances and set new goals for the year ahead. In case you missed your planning session on the first day of January – here is another chance! This is a great time to get clear on what is going on with your finances.

If COVID-19 has taught us anything, it is that unforeseen emergencies occur, and without proper planning, your budget could fall apart should an emergency arise.

We have listed our Top Tips below:

1. Conduct a ‘stocktake’ of your current position:

Over the Christmas and holiday period you can spend and splurge.  It is therefore vital to do a general ‘stocktake’ in the New Year to know exactly how you are tracking toward your financial goals.  Remember, It is much easier to get where you want to go when you already know where you are!

Tip:  Prepare a simple spreadsheet, list your assets and liabilities, and see what your equity position looks like.

2. Pay down your non-deductible debt:

If possible, 10% to 15% of your income should go toward reducing your non-deductible debt. There are a few options for managing debt and it is worthwhile considering consolidating your debts.
The only way that you are going to reduce your debts and get clear on your saving goal is when you accept you need a realistic weekly, monthly, and annual budget. It takes time to develop a budget that works; and it changes along your income and your needs.  But it’s essential to keep at it. Once you have got it right, your debts will come down quickly.

Tip:  Clear your debts before saving.  While this takes some discipline, the interest rates on savings accounts are much lower than credit-card interest rates – other than very special card deals. This means that you’ll be debt-free a lot more quickly if you clear your card debts before you save.

There is of course an argument for a reserve of savings before you’ve cleared your credit cards as it helps you build a savings habit.  However, the numbers don’t support the argument, so we still advise you to eliminate your credit card debt first.

3. Create a Budget:

The greater your understanding of your personal spending patterns the easier it is going to be for you to take a commanding role in the management of your money.

All businesses and practices have a clear understanding of income receipts including the sources of revenue and have a clear understanding of the expenses over the year.  The problem is, even in the cases where a business or practice budget exists, personal income and expenses can remain a mystery!  At the end of the year most people simply don’t know how much money they spent on clothing, on food, on utilities… no idea!

The pattern-breaker for this type of behaviour is as we have discussed to complete a personal budget.  It has nothing to do with changing your income and spending patterns; that will come later, it has everything to do with KNOWING where your money comes from, and where it goes to.

Prepare a personal budget and do it now.  If there are any numbers that you are not sure of, you can estimate or guess and go back and confirm later.  The main thing is to get a first run-through to get a personal profile and get a grasp of your finances.

By completing this exercise, you will immediately put yourself in an elite minority of people what can account for their own personal finances.

Tip:  Ask our team today for the Locumsgroup downloadable template budget info@locumsgroup.com.au

4. Do a weekly check in with your accounts:

A great habit to get into is to allocate time in your diary each week and review your weekly expenses. You will gain a greater understanding as to your spending habits and ensure you are not spending on things that can’t be accounted for.

Tip:  When creating an annual financial plan, create quarterly milestones.  These will allow you to benchmark how you are tracking with your progress. If that doesn’t happen then readjust the plan, move the goal, or play catch-up.

5. Create an internal dialogue with yourself:

Every time you go to make a purchase that is outside of your general expenses, ask yourself, “how does this fit in with my financial goals?” This is a great way to keep yourself accountable on ad hoc purchases that may come up and be a distraction.

Tip:  Be accountable to yourself for discretionary spending.

6. Establish an emergency Fund:

If you haven’t already done so, it’s important to establish an emergency fund. It’s also worth adding in an estimated cost for emergency expenses such as to car repairs or a new hot water heater! It’s better to overestimate than underestimate, so be generous.

Tip: Your emergency fund should be at least 2 to 3 months’ worth of expenses (or access to credit for a similar amount). This fund may take a while to establish but will be worth it in the long haul.

At Locumsgroup, we assist in creating financial freedom for our clients. As part of that process, we will complete a personal budget for you, so you have a clear picture of your cash-flow profile. This will assist you in taking control of your financial life.

If you want to take the steps towards financial freedom, then contact us for a complimentary consultation.

Over the long term, property is recognised as a stable and reliable asset for wealth creation.  Property is a store-of-wealth asset.

Whether you are looking to buy your first investment property or add to your current portfolio, property is a popular way to invest money by many Australian investors.  One of the keys to property’s effectiveness as an investment is that owners tend to stay the course and don’t jump in and out of the asset based on whims and tips at barbecues!  This ensures that a property owner remains invested in highs and lows taking advantage of the long-term trend of real estate which is to increase in value.

Consider these important tips before your next investment:

1. Crunch the numbers!

Whether you are looking raise your deposit and associated purchase costs by borrowing, using the equity in an existing property (either your home or another property asset), using cash reserves, or selling down other investments, it is important do your sums and understand your cash flow.

Owning an investment property can be expensive and there are always hidden costs, like Stamp Duty, Capital Gains Tax, Land tax, Strata fees etc that can throw out your initial calculations if not factored in correctly.

Our team at Locumsgroup can help with your investment plans. We will consider your situation and advise you on the most appropriate debt structure to obtain the most appropriate, tax-efficient borrowings.

2. Choose the right property for the right price

First time investors make common mistakes such as acting on emotion and not on research; or buying a property of a style that would like to live in; or acting too quickly or too slowly.  Other errors include speculating, or not managing their cash-flow properly.  These are all the types of mistakes that can make the vision of building a property portfolio fall apart at the seams – right from the start.

It is critical you seek advice and invest in areas that have strong research that supports capital growth and future potential returns.  So do your research! You will need to find out what the benchmark is for other properties selling in the area of interest. Once you have a benchmark, you’ll be able to realise if your property is selling at the right price.

Another important factor to consider before purchasing your investment property is to ask the question: does the investment property suit the demographics of renters in the area?

3. Your Property Manager is King

Find a good property manager to help take the pressure off you! They can help you manage your tenants, give advice on property law, your rights & responsibilities as a landlord and give you tips on how to get the best possible value for your property.

A good property manager can also take the hassle out of finding the right property tenants by doing the necessary reference checks and make sure they are paying their rent on time.

We do recommend, making regular inspections to visit your investment property and the good news is that you get to claim a percentage of Property Manager fees as a tax deduction.

4. Make the property attractive to renters

The biggest tip is to paint your investment property. Never underestimate what a fresh coat of paint can do to the appearance of a property. Minor cosmetic changes can significantly increase interest in your investment property.

5. Assemble your team of advisers.  

Ensure your debt is structured correctly and the anticipated cash inflows and cash outflows from the property are reasonable and fit into your current budget.

If Locumsgroup play a role in the process, we will assist you with advice regarding the structure of the transaction and your borrowings, and also if required advice on the tax effects of your investment choices and the preparation of your income tax returns.

It’s been a whirlwind of a year with many Australians impacted financially by COVID-19 which means this is going to be a Christmas like no other. While it is easy to understand why Christmas preparation and celebrations may not be top of mind for some, for others it’s the one good thing to look forward to in 2020. A time to celebrate with loved ones and spoil your family with presents.

However, this all comes at a cost.

The greater your understanding of your personal spending patterns the easier it is going to be for you to take a commanding role in the management of your money, especially at this time of the year. Personal income and expenses can remain a mystery if you’re not understanding how much money is being spent on clothing, presents, food, decorations… or anything for that matter.

The pattern-breaker for this type of behaviour is to complete a personal budget.  It has nothing to do with changing your income and spending patterns, that will come later, it has everything to do with knowing where your money comes from, and where it goes to.

Put yourself in the elite minority of people who can account for their own personal finances by following these six simple steps:

Gather all your paperwork

The first step of budgeting is collating all your paperwork – that includes your bank statements, credit card statements, pay slips, utility bills etc. If you’ve been fortunate to have all your paperwork neatly filed away in alphabetical/chronological order, then this task will be simple. On the other hand, if it’s in a disorganised pile don’t let the thought of sorting them out overwhelm you. It may not be the most exciting of tasks, but you’ll feel a great sense of relief once it’s done!

Get to grips with your spending habits

It can be very easy to lose track of what you’re spending your hard-earned money on. To help you understand your spending habits, set up a spending diary to record what you spend and where. This will enable you to categorise all your transactions, so you know exactly what you’re spending your money on. Don’t leave anything out, no matter how small – you’ll be surprised how the little things add up. It’s worth doing this for about a month to help you get a detailed picture.

Make a list

Once you’ve come to grips with your spending habits, the next step is to make a list of all your regular fixed outgoings and earnings. It’s a good idea to calculate this as an annual figure rather than monthly, because monthly figures can vary considerably. For example, you might be paying out for a holiday in one month or Christmas presents the next. Once you’ve worked this out, you can divide the result by 12 (months) or 52 (weeks) to calculate your weekly or monthly expenditure.

Emergency Expenses

It’s worth adding in an estimated cost for emergency expenses such as unexpected car repairs or a new hot water heater. It’s better to overestimate than underestimate, so be generous. And don’t forget about annual insurance policies, such as home insurance.

Cut down!

Are you spending more than you earn? If to your disbelief, the answer is yes, you’ll need to tackle this head on. To do this it’s worth examining your outgoings to see whether you can make any cutbacks. Perhaps you could reduce your discretionary spending or clothes purchases. It’s important to be realistic when you’re doing this – don’t set yourself an impossible task that you know you’ll never stick to.

Obviously, items such as utility bills will still need to be paid, but that doesn’t mean you can’t save money. Some companies provide discounts to customers if you pay your bill on time so make sure you check with them. Similarly, see if you can get a better broadband, mobile phone, or insurance deal.

If you’re lucky enough to have some spare cash at the end of each month, don’t leave your money sitting in your cheque account. Instead, move it to a savings account or pay off your credit card debt.

Finally, don’t forget that this is a fluid process

You should review your budget on a regular basis to make room for any changes in your outgoings or earnings. For example, if you receive a pay review, your rental income from your property assets increases, your landlord increases your rent, or your mortgage costs change. Reviewing your budget will help you to assess whether you’re on track with your finances.

If you need help understanding your finances and preparing a personal budget, speak to one of our financial advisers today.

Locumsgroup once again, are proud to sponsor the Harbord Devils Junior Cricket Club for the 2018/2019 season.

We hope our partnership helps the Harbord Devils hit the season for 6 !