Four financial priorities for 2022

Even if you’re single and have no dependents, income protection insurance is important, but note the shortcoming that an illness often has to be ongoing for the insurer to pay out.

Trauma insurance is slightly different in that it pays a lump sum for a diagnosis of the conditions listed.

From my own experience, I would also throw in health insurance. If not for yourself, provide these safeguards for your family.

pay off debts

Debt does nothing but pull you back. Every day you hold it, chances are it will end up costing you more. Most economic forecasts assume that lending rates will rise later this year.

The cheapest way to attack your debt is in interest rate descending order – that is, from the debt with the highest interest rate to the lowest interest rate.

That usually means a credit card first. The best way to get rid of this debt is to transfer your current card debt to a zero percent balance transfer credit card. You can get such a card – from a different provider than your previous one – for an interest-free period of up to 36 months. Use this time as an opportunity to pay off all your card debt.

Next comes a personal loan, then your mortgage—usually the cheapest of all interest rates.

With your mortgage, the smartest strategy is to refinance at a better rate and just keep your repayments the same.

The savings on interest and your time into debt – for not spending more money than you are already used to – is huge.

invest

Your last priority for 2022 should be increasing your overall wealth.

For example, while you can earn income for 40 years, it’s important to realize that you may need to stretch that amount of money out over 60+ years.

Luckily, we have an excellent pension system in the background to help us build a healthy nest egg for retirement.

With stock market returns soaring 13% in 2021 (ASX/S&P 200) and other assets buoyant, fund rating agency SuperRatings estimates the mid-balanced superfund has grown its balance sheet by 12.5% ​​over the past year.

Including employer contributions, you can contribute up to $27,500 before tax to your supervision this year (e.g., by forgoing salary).

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You may also be able to use unused certificates since 2019-20. This is especially worthwhile if you’ve withdrawn $20,000 that was available amid the financial hardship caused by the coronavirus to access super commissions early.

If you maneuver yourself and your family into a secure financial position, then save and invest, you could quickly be restored to a pre-pandemic position… and then watch yourself move fast.

Nicole Pedersen-McKinnon is the author of How to become mortgage free like me. Follow Nicole Facebook, Twitter or Instagram.

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