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The professional accounting body has outlined a series of tips for Australians to achieve financial-related new year resolutions.
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‘Cut the credit card’: CA ANZ
18 January 2022
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10 minute read
CA ANZ said it is urging Australians to focus on their finances in 2022.
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“The past two years have been incredibly challenging,” CA ANZ financial advice leader, Bronny Speed, said.
“Some people lost their jobs. Others were fortunate enough to build a healthy pool of savings or pay down their mortgage.
“Whatever the scenario, as the economy recovers and businesses and the markets rebuild confidence, we have five tips for improving your financial health in 2022.”
The first tip outlined by CA ANZ is to pay off any debt, with Ms Speed noting that research shows Australia is ranked the fourth-highest country in the world for household debt, made up mostly of mortgages, investor debt, personal debt, student debt and credit card debt.
“Many of us chalked up some debt over the past two years to make ends meet, so it’s time to hit reset and bring that debt under control,” Ms Speed said.
“We suggest you focus on small debts to begin with, as little achievements keep you motivated, and prioritise those debts with high interest rates, as those are hurting you the most. Also be sure to pay off non-deductible debt first.
“And if you find yourself in serious financial difficulty, you can call the National Debt Helpline on 1800 007 007 to receive some free financial counselling.”
The second tip is to “commit to a savings target”.
“Many of us have the best intentions to save, but when pay day hits, we can get carried away and quickly spend what’s in our account – prompting us to think ‘ah well, I’ll try again next month’,” Ms Speed said.
“To avoid this cycle of good intentions but poor self-control, we recommend setting up an automatic transfer on pay day,” Ms Speed said, also encouraging Australians to look for a savings account with a competitive interest rate and “aim to build at least three months of income as an emergency fund in your savings”.
Third, Ms Speed said it’s important for Australians to consider their investment options.
“The thought of investing is daunting for some. You can invest in shares, bonds, managed funds, or real estate, to name a few asset classes,” she said.
“While it can be overwhelming to explore, it is worth doing your homework and assessing what potential investment options are right for you. But be wary of investment opportunities promising quick and significant returns – if it sounds too good to be true, it probably is!”
Seeking advice from an accountant was the fourth tip outlined by CA ANZ.
“Chartered Accountants have done years of study and professional development, to get to the point that they can advise you on the best way to structure your finances. Those additionally trained in financial advice can also make sure your money is working hard for you,” Ms Speed explained.
“For example, you may be able to make voluntary superannuation contributions and enjoy a tax break on them, when to pay down debt and in which order, and the taxation implications of different investments.
“We can also help navigate a complex tax situation if you’ve just moved countries, which is certainly on the cards for a lot of people post-pandemic. We can help with investment suggestions for that excess cashflow, should you have some.”
Finally, the fifth tip encouraged Australians to “treat” themselves when goals are hit, “within reason”.
“What’s the point of success if you don’t enjoy it? Within reason of course,” Ms Speed said.
“If you’ve successfully hit your savings goal, or paid off your credit card debt, celebrate with a nice meal or a special leisure activity. You’ll be helping local business and feel like you’ve earned the reward.”
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