With the year’s end fast approaching, spring is the perfect time to review your financial affairs. From insurance to your super, we’ve put together the ultimate guide to fine-tune your finances.

The start of spring, with its warmer air and sunny days, is a great time to clean our homes and toss out all the unwanted possessions cluttering our living spaces.

While most Australians are probably familiar with this concept of spring cleaning, few of us realise our finances are no different. The Christmas season – with all its costly gifts and parties – will soon be here. Taking stock of your finances and tidying them up now will help make the next year less stressful.

Yet cleaning your finances is not as simple as taking that pile of old clothes down to your local donation bin – that’s why we’ve put together this guide to help you get started.

Give your budget a nudge

Checking your budget is one of the simplest ways to improve your financial health. At its heart, this means checking your monthly expenses aren’t exceeding your income, regardless of whether the income is from a job or your super pension.

Over the past year, food and energy costs have skyrocketed[1] - remember the panic over $10 lettuces back in June?[2] As these prices increase, they reduce the purchasing power of your income each month. In May, the Reserve Bank of Australia warned that Australians’ real wages will fall 3% in 2022 as nominal wage growth falls behind inflation.[3] Keep this in mind when doing your budget.

This is also a good time to review your subscriptions and memberships to things like gyms and streaming accounts. Have they increased their fees? Are you getting value from them?

Ensuring you’re insured

Many people choose to review their insurance when their annual policy renewal notice arrives, but it can sometimes be prudent to review your coverage at other times too. This is especially true if something’s changed in the time since your last review.

It’s not just big changes like getting married or retiring that warrant an insurance check-up. Even smaller changes, like a home reno, or driving your car to work instead of catching the train, can affect your insurance coverage and obligations.

If it’s been a while since you genuinely checked what and how much you’re covered for, now is the time.

Start with your life, income and trauma insurance. Have your debts increased or decreased? Has your salary gone up? Has your family grown or have your children left home? These are all signals that your insurance could need some re-aligning.

Then go through your home and contents, car and health insurance policies and check that the information you provided initially is still current. Ask whether the coverage you have is enough – or maybe even too much. If you went on an online shopping spree during the lockdowns, you might need to increase your home and contents coverage, for example.[4] Or, if you’re now working from home and driving less, you might be able to find a more affordable car insurance policy that reflects your lower risk of an accident.

Super charge your retirement savings

Superannuation is often regarded as the largest asset an Australian will own, excluding their home. For that reason, now’s the time to check to make sure your superannuation is tracking to your financial plan.

The good news is that from 1 July 2022, the superannuation guarantee rate increased from 10% to 10.5%[5], giving employees a welcome boost to their retirement savings. So, if you have some years until retirement, this increase will help your super balance to grow over time.

However, if you’re approaching retirement, boosting your super may mean salary sacrificing. You can ask your employer to put some of your pre-tax income straight into your super, adding to what’s already paid as part of the super guarantee. Not only will this help you build your nest egg, these contributions are generally taxed at just 15% – which may be lower than your marginal tax rate.

Consider whether you’ve recently received some extra money, such as an inheritance or a bonus. If so, then a good way to invest it could be to make a non-concessional (after-tax) contribution directly into your super. That way you’ll benefit from the 15% tax rate on any investment earnings it makes – which is generally less than investments outside super.

But be aware, the maximum you can contribute to super depends on your age.

Not as taxing as it sounds

It’s never too early in the financial year to think about your taxes. Taking steps early on to improve your tax efficiency will make the next end of financial year period a much simpler – and more affordable – affair. This might mean reviewing your property portfolio for possible deductions you might be eligible for as an example.