Meditating to stay on top of your mental health and going to the gym to stay physically fit requires discipline and long-term commitment to achieve mental clarity and physical wellbeing. The same principles of discipline and commitment are required to achieve your long-term financial goals.

Whether or not you have been financially impacted by the Coronavirus pandemic, I want to reiterate the importance of keeping on top of your finances especially during this period of uncertainty.

Here are some tips to help you achieve long-term financial fitness:

1. Set up an emergency account

Life has thrown us all a massive curveball in 2020 with the Coronavirus pandemic. It has shown that nobody can really predict what will happen next. Having an emergency account provides you with that additional cash buffer when something unexpected happens. The rule of thumb is to set aside at least three months of your income needs in a separate bank account.

2. Set yourself up for success if you choose to use a credit card or buy now, pay later services

Many of us are attracted to the benefits of using credit cards and buy now, pay later services like Afterpay. I mean, the perks of frequent flyer points, lounge passes and ability to purchase something you love in 4 interest-free instalments does seem quite attractive.

However, the reasons why these companies do well is because they prey on people’s lack of discipline and poor financial habits. Research has shown that around 50% of our financial wellbeing is determined by our behaviour. These services are only beneficial if you do not fall into the trap of spending what you don’t have.

While I am not an advocate of them if you choose to use credit services, be sure to set yourself up for success.

• Use your credit card to pay for needs, not wants – i.e. everyday bills and groceries, items or services you have already budgeted for.
• Pay off your credit card balance in full every month.
• Stay on top of your spending and make sure you have sufficient cash in your bank account to pay for the instalments – if you can’t remember, write it down.

Everyone loves a good bargain, but if you end up paying interest because you do not have the cash flow to fund your spending, then you will end up paying way more for that item you love.    

3. Make sure you have the right levels of personal insurance

Having the right level of personal insurance in place is prudent financial management especially during challenging times like this. You don’t want a loss of income or unexpected incident to jeopardise achieving your goals. At least once a year, it is important to carry out an insurance audit to make sure you have the right cover.

Insurance is not a set a forget strategy because as your life changes, so does the level of cover required to ensure you and your loved ones are protected.

For example, you might receive an inheritance and use it to pay down debt. This means you possibly don’t need as much cover anymore. However, if you do nothing about it, you could be overpaying for your insurance. Your insurance adviser can help you assess whether you have the right type and amount of coverage.

4. Review your mortgage  

Having a mortgage is easily one of the largest investments we can make, so it is vital to ensure you are in the right product for your needs.

As a rule of thumb, it is a good idea to review your mortgage at least once a year as it could lead you to some extra savings you did not realize you could access. If you are not locked into a fixed-rate mortgage, it may be easier to switch between lenders.

Mortgage rates are currently at an all-time low in Australia and your mortgage broker might be able to negotiate a much better rate to ensure you are not paying too much on your current loan.

5. Seek financial advice

Think of this as an investment in yourself and your family’s future. There is a lot to consider when you are trying to set yourself up financially. Should you pay down debt, grow your Super or borrow to invest etc?

As financial advisers, we would seek to understand what you want to achieve and guide you down the right path to give you peace of mind. We can help to provide that objectivity and ensure that you are well informed on any matters related to your finances. Financial advice can be particularly helpful at major milestones of your life such as retirement, starting a family, receiving an inheritance etc.

Most people think about getting advice only when they are approaching retirement, however, setting yourself up much earlier in life can make a big difference to your financial wellbeing.