5 Tips To Help With The Current Financial Climate

We know at the moment it is difficult to escape talk of the “Recession”, but we think that there are plenty of positive things you can do to ensure that you lessen the effect of the current economic climate.  We offer five tips to help you protect the assets you already have and if appropriate, to get your affairs organised:

1. Have a look at your mortgage:

John and Sally signed up for their mortgage 2 years ago on a fixed rate for 4 years when interest rates were at their peak.  When interest rates started dropping they thought about breaking their fixed rate … but kept putting it off.  It was not until the rate had dropped 4% that they contacted their bank, only to learn that break fees would cost them tens of thousands of dollars.  If they had acted sooner they would have saved themselves a considerable sum. 

It pays to keep in regular contact with your bank or broker.  In the current climate, banks and other institutions are having to be competitive and want to hold onto the customers they already have.  Are you getting the best rate from your bank?  You should talk to your bank to see if there is anything you should be doing differently, or any better rates you can take advantage of.  It may be as simple as staying on a floating rate for longer than you usually would.  The key is to communicate with your bank and make sure you are getting the best deal possible.  What you want to avoid is putting your hard earned money towards unnecessary interest on your mortgage repayments every year. 

You do need to be mindful of break fees on your current mortgage, the ever-changing official cash rate and dropping interest rates.  If you are really struggling, ask your bank for a mortgage holiday (a break from making mortgage repayments) for a couple of months while you get back on your feet. 

2. Consider setting up a Trust to protect what you already have:

It is more important than ever to protect the assets you already have.  Putting assets (e.g. your family home) into a family Trust “ring fences” those assets and protects them from creditors, relationship breakdowns, and potentially wasteful future partners of your children.  If you already have a Trust, you should talk to your lawyer to ensure you are completing a “gifting programme” so your assets get the full protection a Trust can offer. 

3. Make sure your insurance is still suitable for your circumstances:

See an insurance broker or financial advisor to ensure your current insurance is still suitable.  Not only could this save you money in premiums, but it will also ensure that you protect yourself and your family during these tough times.

For example, many people still have an agreed value on their car, which is now worth far less than what it was when they first took out the policy, meaning that the premiums might be higher than they need to be.  It is also important to make sure your medical and life policies still suit your needs and that you have told your insurance company about any changes in circumstances you may have had.  The last thing you want is for a claim to be denied when you really need it to be paid. 

4. Get a property manager for your rental property:

Although you may think this is an extra outgoing you can’t afford, appointing a property manager for your rental property could save you a lot of money in the long run.  Property managers will ensure that rent is increased with the market and will save you the job of informing tenants of increases and chasing up non-payment of rent.  And of course there is the added bonus of having someone else dealing with the dripping taps and broken cupboards. 

5. Make sure your Will is up-to-date:

Ensure you have an up-to-date Will.  The last thing you want is to work all your life building up and protecting your assets, only for them to end up with someone you didn’t intend them to.  Your Will spells out where you would like your hard earned assets to go on your death.  Having an up-to-date Will ensures that your family isn’t left with a mess to deal with on your death and ensures that your wishes are carried out.  It is probably the most important part of protecting your assets.

There has been enough talk of doom and gloom in the last few months, so it’s time for you to be proactive and ensure that you are not spending money unnecessarily and have protected yourself and your family as much as you can.