Make your money grow: your year round financial management plan

As the saying goes, money doesn’t grow on trees. But, just like nurturing a beautiful garden, if you give your nest egg the right attention throughout the seasons, it will grow into a substantial asset. Let’s take a look at what you need to do throughout the year to cultivate a great financial future.

As it’s the start of the financial year, July is one of the best times to review your investments. So how should you go about doing this?

First, develop a spreadsheet of your super and investments. On a quarterly basis, record the price of each asset for the last day of the period, for instance the share price, unit price and estimated property value. Then record any income generated by the investment for the quarter. Compare the performance to a benchmark (for instance, the ASX 200 Accumulation Index) and if you find any significant underperformance, do further research to understand the reason why. If necessary, consider whether you need to talk to your financial adviser about changing your investment approach in light of any underperformance.

Having made any necessary changes to your investment strategy for the new financial year, August is the time for reviewing your household budget. For many of us, September is when we need to work with our accountant to lodge a tax return.

October is the time to review your investment performance for the July quarter. November is the time to plan for any additional Christmas expenses. Then in December, stick to the spending plan set out during November.

In January set aside time to review your financial goals. In February, make sure you’re sticking to the resolutions you made in January. March is the month your focus should be on your insurances. Are your car, home, health and life insurances still adequate? In April, expect your health insurance premiums to rise and factor this into your budget.

May’s a big month for financial matters, starting with the Federal Budget. It’s also the time of year when you should start your annual tax planning. Assess whether you have adequately maximised your before tax contributions and prepay any interest on investment loans or premiums on income protection insurance to bring forward deductions. At this point, also consider realising capital losses to offset capital gains, pay for any tax deductible expenses and evaluate whether your investments are structured as tax effectively as possible.

It’s also the month when you should focus on your super contributions, to ensure you don’t exceed annual contribution caps. The idea is to review legislated limits for super contributions, both concessional (before tax) and non-concessional (after tax). Then, check online or call your super fund for total amounts contributed in the current financial year. Add these amounts to your spreadsheet. If you’re salary sacrificing, contact payroll to increase or decrease contributions, depending how close you are to your limits and, if you’re under, how much extra you can afford to contribute.

In the lead up to the close of another financial year, June is a time to reflect on whether you’ve achieved what you set out to during the year.

A great financial future means paying attention to your finances and assets throughout the year. That way, your nest egg will continue to mature through the seasons.

Why not call us today to find out how we can help monitor your investment strategies and help your investments grow?


*Please note the amounts for 2015/16 are estimates only and are confirmed by the government by June 2015

photo credit: NickiMM via photopin cc