End of Tax Year? Time for a Financial Health Check

This month’s announcement by the Reserve Bank that the Official Cash Rate (OCR) will be held at 5.5% was unsurprising and continues to offer some stability for the local market. However, with average mortgage rates having more than doubled over the past two-years, many New Zealand households are feeling the pinch.   

March 31st signals the financial year end for Kiwi’s. As you file your tax return, it’s also a good idea to run a comprehensive health check on your personal finances.  

A financial health check allows you to assess your current standing and explore opportunities for cost savings or adjustments that could significantly impact your long-term financial well-being. Additionally, reviewing your finances alongside your tax obligations can also help you maximise potential deductions and ensure a smooth tax filing process. 

When conducting a financial health-check, points to think about include:  

Take the time to review your loan structure to ensure it aligns with your current financial goals and circumstances. Given that mortgages are often a household’s largest financial commitment, it’s wise to scrutinise yours closely.  Analyse your current loan terms and interest rate. If recent interest rate hikes have made your existing rate less favourable, it would be worth consider refinancing.  If your budget is stretched, we can look at ways to reduce your payments such as extending the loan term, moving to ‘interest only’ payments for a period, or consolidating credit card and hire purchase debt. The key thing is to understand your options so that you can take action to better manage your finances.   

Beyond refinancing, explore options to accelerate your mortgage repayment.  Increasing your regular repayments, even by a small amount, can significantly reduce the total interest paid. Consider allocating any accumulated savings or bonuses towards lump sum payments to further expedite the repayment process. 

A robust insurance portfolio safeguards your financial security in unforeseen circumstances.  Review your medical and health insurance policies to ensure they adequately reflect your current health needs and any changes in your personal life. This could include the development of new health conditions, a change in job, a growing family, or increased medical expenses.  Adequate coverage ensures you are not left financially vulnerable during critical situations. 

Likewise, reviewing your general insurance protects your assets against unexpected events.  When undertaking a 360 review of your finances, it is also important to review your car, home, and contents insurance policies to ensure they align with your current circumstances.  Have you recently upgraded your car or purchased valuable items?  Reflect these changes in your coverage to avoid coverage gaps that could leave you financially exposed in the event of an incident. 

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