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Your 10-step personal financial audit checklist

The beginning of the financial year and tax time present ideal opportunities for a personal financial audit, but you can carry out this important task at any stage. Just follow this 10-step checklist to guide you through the exercise.

1.     Collect last year’s income and expenses information

Gather your income data for your salary (from your PAYG statement) and any business and investment income.

Check your spending in categories such as living expenses, rent or mortgage payments, interest expense and discretionary expenses (e.g. holidays, eating out, entertainment). Your bank transaction account or credit card account statement may help you to sort expenses into categories.

2.     Review last year’s results

Now work out whether any expense headings increased unexpectedly, and whether your total expenses are (ideally) less than your income. Looking forward, are there any expenses you can reduce (such as unused subscriptions)? Work out your likely expenses for the coming year and set discretionary spending limits.

3.     Inspect your debts and credit use

Check the interest rates on your credit cards and loans, including your mortgage. You may be able to switch cards or refinance loans at a better rate.

Review your usage of credit cards and Buy Now Pay Later if you’re not clearing your debt within interest-free periods. Create a payment plan to reduce these high-interest debts.

4.     Check your savings

Aim to build an emergency fund covering 3-6 months of expenses. But don’t let your savings loiter in a low-interest account. You could get a better result from a high-interest savings account, a mortgage offset account, or short-term deposit.

5.     Review your superannuation

Are your superannuation investment settings appropriate for your age and risk tolerance?

How does your fund’s performance compare with others? The ATO’s Your Super Comparison Tool can help you assess this.

Check that your employer has made the necessary contributions on your behalf. Consider making personal concessional or non-concessional contributions to boost your super balance, and check your eligibility for government co-contributions and spouse contribution offsets.

6.     Examine your other investments

Look at the way your investment portfolio is allocated between, for example, shares, property, cash and bonds. Does your portfolio’s performance align with your financial goals?

Check your brokerage fees and fund management fees to make sure you’re getting the best deal.

Make sure your CGT records are accurate and up to date.

7.     Reassess your insurance needs

Examine your life, property and health insurance, and also your cover for income protection and disability. Do you have enough coverage given any recent life changes, such as children or buying a home? You may need to get up-to-date valuations to ensure you are not under-insured or over-insured.  

8.     Scrutinise your tax deductions

Ensure you’re not missing out on any legitimate deductions related to work, investments, rental property, super contributions and charity donations.

Check that your private health fund tax statements are correct.

Consider using the ATO myDeductions tool for the coming year.

9.     Reconsider your goals

Significant life events can alter your financial priorities. If you’ve changed jobs or your marital status, welcomed children or bought or sold a property, struggled with your health or are looking forward to retirement, you may need to adjust your savings and investments to align with your financial goals for the foreseeable future.

10.   Prepare your action plan

Set some financial goals – such as reducing specific expenses or increasing your emergency fund – for the next 12 months, and review your progress on long-term goals such as home purchase or retirement.

Overwhelmed? A financial adviser can help.

That’s quite a lot to get your head around, but if you can make a personal financial audit a part of your annual routine, it will pay dividends. You can rely on a qualified financial adviser, who knows all about budgeting, debts and credit, savings, super, investments and financial goals, to guide you through this important task.      

Warm regards,

___
Ben Wieland | EGU Wealth Management
Partner and Senior Wealth Manager

1300 102 542 | 0423 710 820
ben@egu.au | www.egu.au
GPO Box 1598 Brisbane QLD 4001

This information is general in nature and does not take into account your personal objectives, financial situation, or needs. Before acting on this advice, you should consider whether it is appropriate for your individual circumstances. If the advice involves acquiring a specific financial product, you should read and consider the relevant Product Disclosure Statement (PDS) before making any decision.

Sources:

Ben Wieland