Use the early down time to make the financial calls

Bruce Brammall, The West Australian, 29 January 2024

Sometimes you’ve got to just rip the Band-Aid off.

Too much time passes from when you start to think about a decision you know you need to make, or accept, and actually implementing that decision.

Everyone has stuff in your life that, right now, you’re yet to make a firm commitment to, even though you know you should.

Some of the time, it’s about procrastination. Sometimes, you’re choosing to prioritise other things. Other times, it’s the fear of the initial pain from the rip itself.

Genuinely, sometimes the delay and extra thought being put into it can lead to a better result.

But no matter whether it’s something in your personal or professional life, or a decision about your finances, you know the decision needs to be made. And generally sooner rather than later. At least so you can move on and see the back of it.

A lot of people spend time thinking about these things over January, while having some time off.

And while I don’t do New Year’s resolutions, I do believe the first month of the year is a great time to rip off the Band-Aids. Make some decisions. Commit to stuff that you know will, ultimately, improve your life.

That first step

If you’ve just committed to improving your finances, have you made your first move yet? Committing is one thing, taking action is the next step.

So, what are the fundamentals of your personal finances?

It’s different for literally everyone. There’s no one-size-fits-all financial program that you can plug in and play. (Or financial advisers wouldn’t exist.)

At it’s most basic, it’s about protecting what you’ve got and then growing it.

“But I’ve got nothing to protect.”

Yeah, nah. Don’t want to hear that. Protection is about insuring what you’ve got, for you and your family.

If you’ve got a job, a partner, kids, a mortgage, then you’ve got people and things you need to protect, from a life insurance perspective.

There are four main insurances – life, total and permanent disability, trauma and income protection – and they are all designed to save your ass, or protect your family, in the event one of life’s big nasties occurs to you.

See a professional. While your super fund might be able to deal with some insurances, they are very limited in what they can recommend and are, generally, biased towards their own super-fund product.

Most people from their late 20s through to their mid-50s or even 60s need insurance. It’s usually a matter of working out how much.

Growing it

I know, insurance ain’t the fun part of your personal finances. It’s critically important, foundation stuff, but doesn’t get the dopamine flowing.

Growing your wealth is what most people think about when they make the decision to improve their finances.

But here, what needs to be done is unique to individuals.

For those literally starting from nowhere, it’s often as basic as budgeting – learning to reduce spending and increase saving.

There are plenty of useful online calculators that can help you with figuring out your monthly or yearly expenses. Honestly plotting what you’re spending your dough on can be eye-opener.

Everyone (well, pretty much) has superannuation. Is it invested properly for you? What fees are you paying? Have you been showing it any love?

Your superannuation is going to do some pretty cool stuff as you age, if you show it some attention early on in its life.

One of the most important  things to understand about super is the timeframe. If you’re, say, 40, you can’t touch it until you are 60 or 65. But it’s then designed to be turned into an income stream to, hopefully, last you another 20 or 30 years. At age 40, it’s designed to be a 40 or 50 year investment.

That is, it’s an ultra-long-term investment. And, particularly early on, should you be considering taking on some more risk?

Then it’s on to your non-super investments – potentially starting with a plan to pay down your home loan faster, but also moving further into personal investments.

Shares, property, building up a cash fortress. Which is too much for today …

Making the decision is great. Putting a plan into action? Can be tough. But get a start, or bring in the professionals. And look forward to the changes it will make to your life.

Bruce Brammall is the author of Mortgages Made Easy and is both a financial adviser and mortgage broker. E:

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