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Financial Literacy 101

Here is what we think it means to be financially literate.

1. Protection

To avoid footing a huge bill in an emergency, insurance is one of life’s must haves – even if you think nothing is going to happen to you. Engage us to assist you in making sure you get this right. Don’t be caught by paying too little for a poor insurance contract and in the reverse paying too much for cover you don’t need or can afford.

2. Mortgage

Choosing the right mortgage can save you thousands of dollars a year, and extra repayments can dramatically reduce the life of your loan. The dynamic can be a very powerful tool to get you debt free much more quickly. For example: Someone with a $400,000 mortgage over 25 years, if they can afford to pay around $500 more than the minimum payment a month, they’ll pay that loan off in 16 years, so they can save nine years and more than $100,000 in interest.

3. Budget

A focus on money management will make a tremendous difference to your situation.

The most important thing that we stress with our clients is money management and making smart decisions with your money. If you focus on what you’re spending, what you’re saving, you’ll have greater financial success. The great way to measure this is to monitor your savings account. Is it getting bigger or smaller each month?

Having a process to monitor your spending will also help you identify areas where you might be able to cut back, if you want to put money toward something else.

4. Credit Card

Having a good understanding of your credit card, its fees, charges and repayment cycle is essential. Avoiding debt and paying the balance off in full monthly is ideal, Australians have an average of $5,000 credit card debt, making it important to ensure you’re in control of payments. Paying more than the minimum can really slash the amount of time that it will take to pay off your balance. With a $5,000 credit card debt and if you stopped using that card and if you just paid the minimum, that could take you about 30 years to pay off that loan.

Whereas if you pay off more than the minimum, say around $200 per month, you could pay that balance off in a little more than two years.”

5. Super

The first step is to make sure your finances are in order for retirement with one superannuation account that is appropriately invested in a good spread of investments that are within the confines of the amount of risk you are prepared to take to meet your retirement goals.

If you can afford it, putting more into super, can really maximise your quality of life in retirement. It is really all about getting the strategy right. The product that you use will have an impact but contribution strategies and the underlying investments that will make all the difference.

Talk to us about how we can make all the difference.

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