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Award winning Financial Advisor Fran Hughes

Common mistakes to avoid during crisis
Blog 48 Fran Hughes

A year has passed since the world was turned on its head with the spread of a global pandemic. Economies recording a spike to their unemployment rate due to the lockdowns, businesses shut doors and we were all thrust into an e-commence digital world. In a bid to avoid an economic crisis, Governments all around the globe propped up their economies with record high fiscal stimulus packages.

In an ideal world, the financial boost should be enough and assumes that everyone was financially prepared for tough times. But in times of crisis, it can all be a little overwhelming. With light at the end of the tunnel, on the back of the vaccine rollout, here are 5 ways to avoid common financial mistakes and get the household finances back in the black.

Not paying attention to the household finances

According to a study by Deloitte Access Economics[1], a worrying 14 percent of households struggle to pay their bills (including rent, mortgage, utilities and credit cards). The study found that 26 percent are spending more than they earn and live from pay to pay. Taking the time to pay a little more attention to the household finance, will ensure that you stay financially afloat and not fall into unnecessary debt.

Start by listing all discretionary spending and cancel out any non-essential spend. Identify those recurring direct debits to subscriptions to services you no longer use. Perhaps home cooking will do rather than Uber Eats. Schedule a payment plan with essential providers such as utilities and rates. Discuss holiday repayment options with your bank or landlord.

Try using a spreadsheet or budgeting app (www.goodbudget.com or www.moneybrilliant.com.au) to make tracking your spending much easier. You’ll quickly get a true picture of your financial health.

Not actively building up emergency funds

The study by Deloitte Access Economics[2] goes on to find that 46 per cent of households don’t have emergency savings to fall back on if they are out of a job.

While we could not have predicted a pandemic, it certainly has exposed the financial vulnerability of not ‘saving for a rainy day’. A general rule of thumb is keeping aside three to six months’ worth of living expenses in an easy-to-access bank account.

Making emotional investment decisions

Sharemarket volatility has seen global markets bounce back, resulting in a renewed investor confidence. With the likes of Bitcoin making news of all-time highs, and global sharemarkets reaching new records, you may be driven by greed to abandon your long term investment strategy in your portfolio and chase returns. However, sharemarkets have proven that volatility is alive and well. Logically, it pays to stay the course of a quality investment strategy whilst reviewing it regularly in line with financial goals.

Assuming Estate affairs are in order

Half of Australians and Americans do not have a Will. Alarming isn’t it? Of these numbers, 34 percent gave reasons of ‘haven’t got around to it.’ Without a valid will, your estate affairs could lead to financial chaos. In light of the current pandemic which has fatal consequences, setting up your estate affairs is top on the list. A simple Will can be drafted up by a lawyer for as little as the cost of smart TV.

Not seeking the advice of a professional

In times of a financial crisis, most would opt for a ‘Do-It-Yourself’ approach to save on costs, rather than seek the advice of a financial professional. Working alongside a subject matter expert such as financial advisor, may just achieve the results you were looking for without the financial stress.

Speaking with a financial planner can help guide you to make smart money choices. You can use the Financial Planning Association Match My Planner tool to reach out to a CERTIFIED FINANCIAL PLANNER® professional near you.

Who is Fran Hughes?
Passion and purpose; two words that typify Fran’s approach. Committed to helping people realise these financial ambitions, Fran advocates a wealth mindset, one which she achieves through financial empowerment. She does this by breaking down and explaining complex financial products and concepts in a straightforward and plain-English manner. As an awarded-winning Female Financial Advisor, Head of Financial Solutions at Nexia Perth, Fran understands that having a wealth mindset truly grows success and financial success. Fran’s success as a Business Owner, Wealth Advisor, International Speaker, Global Leader and now Australia’s Top 50 Most Influential Financial Advisor, has empowered this very mindset allowing her to give to her clients financial coaching on a wider scale. Fran is a regular on media and radio, with a weekly finance column in The West Australian. When she’s not advising clients on money matters, she’s a mum to two daughters, wife, businesswoman, humanitarian, urban athlete and loving life!

[1] Source: Financial Consciousness Index (FCI) by Deloitte Access Economics.

[2] Source: Financial Consciousness Index (FCI) by Deloitte Access Economics.

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