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Financial Health Check: Identifying Risks

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Published: May 11, 2020

With financial health comes freedom.To achieve financial health you have to take stock. It’s important to look at your situation and look at the big picture.There is a variety of information that plays a role in a financial health check. Some will require more attention for others, dependent on your personal circumstances.

Let’s look at a few key areas that will play a role in your financial health check. If you identify critical areas now, you can maintain your financial health and ensure your future is safe. Here’s a great video we found on how to gain financial freedom, but make sure you keep reading for our tips!


Personal

Your relationship status is important because if you are divorced it may heavily impact your financial health.

Additionally, financial dependents and the length of time you expect them to be dependent will be a considerable squeeze on your financial health.

Employment

Your current position and salary are just as important as your retirement plan. Both will influence your financial health.

You must also consider whether you have paid leave available, whether redundancy is in your future or you plan to move to a new company. Of course, you must also consider what percentage of your salary is placed in superannuation.

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Social Security

At what age will you be eligible to receive your pension?

Will you be eligible for other benefits?

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Income & Expenditure

This is where it gets more in-depth. When looking at the previous financial year:

  • What was your taxable income?
  • How much do you take home each pay cycle?
  • Are you still paying off a HECS/HELP loan? What’s the outstanding balance?
  • Do you track your expenses related to work?
  • What are your main expenses?
  • What about your sources of income?
  • Do you expect either of these situations to change in the near future?
  • Do you track spending and maintain a budget?
  • Are you spending more than you earn and putting yourself in a debt hole?
  • What about a savings account that you regularly make deposits into?

Your savings should be able to fund three months of living at a minimum. Do you always pay your bills on time? Do you plan for large expenses?

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Assets & Liabilities

Now, to list your assets and liabilities:

  • How much is in your superannuation?
  • Are your contributions non-concessional or concessional?
  • At what age can you withdraw it?
  • Do you have an income stream for the retirement stage of your life?
  • Do you hold investments?
  • What interest rates are on your outstanding loans?
  • When it comes to your mortgage, are you paying over the minimum requirement or is it fully paid off?
  • Do you pay off credit cards within the interest-free period?

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Planning

Your financial health requires planning, in terms of both insurance and estate planning.

From life insurance, to insurance for permanent disability, and beyond.

Additionally, you have to consider your physical health in terms of insurance claims and changes of circumstance. In terms of estate planning, do you have a will?

Is there an executor in place who knows where to find your will?

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Trades & builders

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