5 Practical Tips on Taking Control of Your Finances From A Trusted Financial Advisor

Economies around the world are experiencing the highest rates of inflation in a generation. Internationally, households are feeling the strain of rising prices on their finances. With the Russian invasion of Ukraine amplifying ongoing pandemic supply chain disruptions, there is a possibility that heightened inflation will continue into 2023.

Financial planning is a powerful process to aid you in this tumultuous time to take control of your overall financial strategy.

Here are 5 practical things you can do to get your financial house in order:

1. Review your spending habits

One of the advantages of an inflationary environment for many people has been the curb on frivolous spending. That makes it a great time to review your spending habits and separate essential expenditure – on mortgage payments/rent, bills etc – from discretionary spending. The chances are that the former has increased significantly over the last few months and you can use this as a springboard to make adjustments to your spending habits when life is back to normal, budget more wisely, and start saving. For example:

It turns out that the $4 per day flat white you buy on the way to work is not an essential expenditure!

Save $1,000 in a year simply by cutting out the caffeine ($4 x 5 days per work week x 50 work weeks a year = $1,000) and hey presto, you’ve got a bigger emergency fund than 69% of Americans.‍

2. Work out what you really want in life

Goals will motivate you to forego that daily coffee, or stick to any other spending cuts you decide to make. Tricky times often fuel reflection which makes them a great time to think about what is really important to you. Harness that and use it to set some concrete goals. Whether you choose to save up to buy your own home, send your kids to university, buy your dream car (although bear in mind point 1!) or secure a comfortable retirement, come up with a long-term plan of how to save and invest to make your goals a reality. At this stage, a financial planner is a good ally to get on board to crunch some numbers.‍

3. Look beyond cash and think long-term.

While interest rates are increasing and there are now some returns available on cash via fixed-term deposits, cash is still getting eroded significantly by inflation. Historically, a diversified investment portfolio has outperformed cash and inflation over the longer term, making the current market dip a great time to invest towards your longer-term goals.

‍4. Protect against the unpredictable

If this crisis has taught us anything at all it is that life is unpredictable and protecting your finances is more vital than ever. First up, you need an emergency fund to see you through tricky times. Next up on the protection front are life insurance, critical illness cover, income protection, and essential tools for protecting you and your family. If you find it hard to work out your requirements, this also falls within a financial adviser’s remit.‍

5. Find a financial ally

If you don’t already have an adviser, now could be a good time to get someone on board who can help you crystallise your thoughts and implement a plan. If you already have a plan but wonder if you could perhaps be doing better, maybe now is the chance you’ve been waiting for to get a second opinion.

If you’d like to talk about any element of your financial planning, I’d love to hear from you. Contact me at jamiebubb@melbournecapitalgroup.com for an informal chat and let’s ensure that some good comes of this situation.

Jamie Bubb-Sacklyn is a fully qualified Chartered Financial Planner & Private Wealth Manager with deep experience in sophisticated wealth structures, corporate protection solutions, inheritance tax planning, and investment structuring.