RateCity.com.au
powering smart financial decisions

How to perform a financial health check for the new financial year

How to perform a financial health check for the new financial year

The new financial year is almost upon us and it’s the perfect time to take stock of your personal finances and perform a financial health check. After all, even the smallest of changes made through a financial health check may help you to achieve your goals.

If you’ve never performed a financial health check, it’s all about looking at your current providers, the rates you’re being charged as well as any fees, comparing options across the market and ensuring you’re still getting the best value for your financial needs and goals.

In fact, your bank may offer a free health check, with Commonwealth Bank providing financial guidance for its customers online or in-branch. Otherwise, it’s a relatively simple process that may help you to save hundreds, if not thousands of dollars, by the next financial year

Using RateCity comparison tools, such as tables and calculators, let’s look at how you may perform a financial health check.

RATECITY FINANCIAL HEALTH CHECKLIST: Different financial products and what to compare

ProductsWhat to compare
Bank accountsFees, including overdraft fees and foreign transaction fees
Savings accountsInterest rates

Fees

Features, including savings tools

How frequently your provider cuts rates

Credit cardsInterest rates, including purchase rates, cash advance rates and balance transfer rates

Interest-free periods

Rewards programs and perks

Fees and charges, including annual fees, foreign transaction fees and cash advance fees

Card type; Visa, Mastercard or AMEX

Car loans and personal loansInterest rates

Fees, including application fees and account-keeping fees

Features, including a redraw facility and making extra repayments

Loan term

Loan type (secured or unsecured)

Home LoansInterest rates, including comparison rates

Fees, including annual fees

Features, including offset accounts and a redraw facility

Loan type (fixed rate, variable rate or split rate)

SuperannuationFees

Investment options

Investment performance

Insurance options

Customer service

Banking products

Starting simple, make a list of all the basic everyday banking products you use, meaning your bank accounts, savings accounts and buy now, pay later apps. Then, check what fees (if any) your provider is charging, what the interest rate is if it’s a savings product, and what features it offers.

  1. Bank accounts – Most bank accounts do not charge account-keeping fees, so if your provider does, it may be worth comparing other options. You may want to also consider switching if your provider does not offer fintech you’re interested in, such as Apple Pay.
  2. Savings accounts – While interest rates are at record lows, there are still rates above 1 per cent if you’re willing to shop around. In the meantime, you may want to keep fees low to save as much of your nest egg as you can. Also consider if your provider offers helpful savings features like round-up tools.
  3. Buy now, pay later – Are you constantly being stung with fees from your buy now, pay later app? Or are you interested in access to a higher purchase limit? Consider comparing other options today.

Credit products (excl. home loans)

Next, look at any credit products you have, including credit cards, personal loans, and car loans. Check what fees (if any) your provider is charging, what the interest rates being charged are, and what features they offer.

  1. Credit cards – It may be worth looking at your Spending Profile to ensure you’re using the right card for your needs and goals. Think about how you use your credit card and make sure it lines up with how you use it. Then, perform a comparison of the market and see if your card(s) are still the most competitive in terms of rates and fees.
  2. Personal loans & car loans – Paying off your debt is arguably the most important thing you can do for your financial health if you have a personal loan or a car loan. But did you know that you can refinance these loans if you’re unhappy with your provider or rate? Keep in mind that refinancing and extending your loan term may increase the amount of interest you pay overall.

Home loan

Arguably the biggest debt you’ll ever pay off, getting your mortgage into a better position can mean the difference in tens of thousands of dollars over the life of the loan. Therefore, we’re going to give it special focus when performing your financial health check.

Firstly, you’ll want to find your current interest rate. Then hop online and research your provider’s rates for new customers, as well as other lower rates on the market. If your home loan provider is offering a lower rate for new customers you may want to consider picking up the phone and requesting they reduce yours. If they refuse, mention you’ve seen lower rates offered by said lenders you’ve already researched and threaten to refinance. The provider should hopefully be encouraged to keep you as a customer and reduce your interest rate.

If not, then it’s worth considering if refinancing your mortgage could be beneficial this new financial year – especially if you’re in mortgage stress. Refinancing can be helpful for several reasons, including reducing your repayments, paying off your loan faster, adding features to the mortgage, accessing equity and more.

There are a few steps involved in refinancing and the process can take a few days, if not weeks. There may also be switching costs associated, such as application fees, so it’s not without its risks. But if you switch to a lower-rate lower-fee lender, for example, you may save hundreds a year, or thousands over the life of a loan, in interest charges and fees. Discover how much you may save by switching home loan providers through a Mortgage Calculator.

Superannuation

While not something most younger Australians think about, it’s one of the most important financial products you’ll want to get right as early as possible. Saving for retirement is a fundamental part of healthy personal finances as your nest egg will hopefully fund decades of your retired years.

Look at your current superannuation fund, including your balance, how much you’re contributing and its fees. Many super funds will project how your current input and balance will grow over however many years until the current preservation age.

If that amount won’t allow you to live comfortably, consider the following:

  1. Salary sacrificing - If your budget allows for it, making more than the standard 9.5 per cent pre-tax deposit into your super fund may help boost your balance thanks to compound interest.
  2. Switch up your investment options – there are different levels of investment options based on risk across all super funds that may be worth exploring.
  3. Compare other superannuation funds – if you feel your super fund is not performing how you want, if the fees are too high, if you’re unhappy with your insurance options or customer service, consider comparing your superannuation fund options and switching. The best super fund for your financial health is a personal choice, and it’s worth keeping in mind that past performance is not indicative of future results.

Did you find this helpful? Why not share this news?

This article was reviewed by Personal Finance Editor Georgia Brown before it was published as part of RateCity's Fact Check process.

Advertisement

RateCity

More bank accounts news

More news? Read more here

Learn more about bank accounts