Six important reasons to check your financial health

1. In today’s market, banks are fiercely competitive.

In order to win loans banks frequently offer incentives in the form of rate discounts, free benefits or product add-ons that can be useful in many cases. If your loan was put in place more than 2 years ago it is likely that there are better priced products with more beneficial terms around now than were available at the time you signed your agreement. Completing a financial health check will highlight the fees you are paying on all your loans, credit cards and lines of credit making it easy to see where lower interest rates could be sourced – thus saving you money.

2. Banks do not reward loyalty.

Many people think that staying with the same bank over many years will benefit them if they need a personal loan, a mortgage top-up or other financial products. This is not the case. Just because you’ve been a long-term customer, never defaulted on a payment, and deposit your income faithfully every month does not mean they actively ensure your loan is at the best possible rate or that they should increase their liability. In fact, the opposite is true. Clients who stay with the same bank, and the same loan over extended periods, usually receive generic rises and falls in interest rates, whereas new clients receive various incentives to leave their existing bank and migrate their loans to the competitor. Filling in a financial health check solidifies what you are paying, who you are paying it to and why you are paying it. Once this is clear, it’s time to shop around for better deals.

3. How many people keep a budget?

How many people say “No sooner does my salary come in than it is gone again”. Who keeps track of what they spend and where? The answer is: very few. Completing a financial health check is a structured way of recording your finances in an easy to follow format. It allows you to formulate an accurate record of income and expenses over a period of time – be it monthly or annually - a bit like a profit and loss account. It can be quite a shock when faced with amounts spent subconsciously, as they add up fast. By analysing what you spend and where, it enables you to understand how to manage your money more effectively.

4. Listing major financial commitments also helps to plan for the future.

Completing a financial health check will indicate where you are financially at a precise point and will pinpoint what changes need to be made in the future to reach particular financial goals. For example, let’s say that you decide to buy an investment property, which should appreciate in value over time, effectively helping to secure your financial future. Your financial health check will enable your property specialists to calculate your borrowing capacity, along with other recommendations they might suggest. You may need to save a deposit first and analysing your finances will show where savings can be made to get you where you want to go.

5. A financial health check will also highlight where debts can be consolidated, saving fees on multiple accounts.

Listing credit cards is always interesting because it is the credit card limit that banks take into consideration as an expense not the actual amount owed on each card. The health check will quickly throw up any issues here enabling you to decide whether you really need the limits they are set at. Again, looking at what you record on the form helps to clarify your actual requirements.

6. It is absolutely essential to complete a financial health check when considering making substantial investments, such as a property purchase.

Working in the dark is a recipe for disaster and could lead to over-committing yourself because certain financial aspects of your life haven’t been taken into consideration before going ahead. It’s far better to be prepared than mop up an expensive mistake later.

Step 1 is to complete a basic financial summary of your situation so we can discuss your current commitments and then look further at the details and how we may be able to help you reduce your loan rates, thus saving you money. If you are looking at investing in property we can then structure an investment plan for the future.