EGU
Principled Wealth Management, Practical Business Advisory, Precise Accounting and Taxation
CANVA EAT 35.jpg

Insights

Insights

The annual financial audit: a structured approach

Most households accumulate financial complexity faster than they review it. Loan rates drift, insurance cover becomes misaligned with circumstances, superannuation settings go unexamined, and savings sit in accounts that stopped being competitive years ago. The exercise below is designed to address that. It can be completed at any point in the year, though the period around 30 June has the practical advantage of coinciding with the availability of complete annual income and expense data.

Step 1: gather the year's income and expense data

Start with your PAYG payment summary or income statement, and add any business or investment income received during the year. On the expense side, bank transaction records and credit card statements are the most reliable source — categorise spending into housing, living costs, debt servicing, and discretionary items. The categories matter less than the discipline of completing the exercise.

Step 2: review the results honestly

Identify any categories that increased beyond expectation. Establish whether total expenses remained below total income. Look forward: which expenses are genuinely discretionary and capable of being reduced? Unused subscriptions are the obvious starting point — they accumulate quietly and compound over time. Set forward-looking spending ranges for the categories that matter most.

Step 3: examine debt and credit

Review the interest rates applying to all credit facilities — credit cards, buy-now-pay-later arrangements, personal loans, and the mortgage. Rate improvements are available on most of these products to borrowers who ask. For credit card and BNPL balances carried between months, a structured repayment plan should take priority over almost every other financial objective. The effective cost of these facilities is significant.

Step 4: assess the savings position

A liquid emergency reserve equivalent to three to six months of essential expenses is the baseline. Funds held for this purpose should be placed in a high-interest savings account or mortgage offset rather than left in a standard transaction account. The rate differential between a primary banker's default account and the competitive market is rarely immaterial.

Step 5: review superannuation

Examine whether the investment option currently applied to your superannuation balance remains appropriate given your age, income trajectory, and risk tolerance. Compare your fund's performance against peers using the ATO's YourSuper Comparison Tool. Confirm that the employer contributions appearing in your account are correct and complete. Consider whether concessional or non-concessional contribution opportunities remain available to you, and whether you are eligible for government co-contributions or the spouse contribution offset.

Step 6: review the investment portfolio

Assess the current allocation across asset classes — equities, property, fixed income, cash — and whether it remains consistent with your stated objectives and time horizon. Review management fees and brokerage costs. Ensure that capital gains tax records are current and accurately maintained.

Step 7: reassess insurance coverage

Life, income protection, total and permanent disability, and trauma cover should be reviewed whenever personal circumstances change materially — a new child, a property purchase, a significant change in income, or an approaching retirement. Property and contents insurance valuations should be current; the cost of under-insurance has been demonstrated clearly in recent years. Review health insurance extras cover for value relative to likely utilisation.

Step 8: confirm deduction entitlements

Legitimate deductions relating to employment, investments, rental property, and charitable giving are worth reviewing annually to ensure nothing has been overlooked. This is territory where a conversation with a registered tax agent is worthwhile — deduction entitlements are specific to individual circumstances.

Step 9: revisit financial goals

Significant life events alter financial priorities in ways that are not always immediately visible. A change in employment, a shift in family structure, the acquisition or disposal of property, or the proximity of retirement each warrants a reassessment of whether current savings and investment settings remain aligned with what you are working toward.

Step 10: set the action plan

Identify two or three specific, measurable objectives for the coming twelve months — reducing a particular category of expenditure, building the emergency reserve to target, increasing superannuation contributions. Record progress against these at the mid-year point. The habit of review compounds over time in a way that one-off exercises do not.

If you would like to work through this audit with us, we are available to do so.

Ben Wieland
Partner, Wealth Manager

1300 102 542 | 0423 710 820
ben@egu.au

Sources:

This is general advice. It does not take account of your objectives, financial situation, or needs, and is not a substitute for advice that does. Before acting on anything in it, consider whether it suits your circumstances, and consider the relevant Product Disclosure Statement.

Ben Wieland