Tips for creating financial tailwinds when facing economic headwinds

by | Dec 14, 2022 | Managing Your Finances, AMP, Managing Your Mortgage, Police Association, Ryman Healthcare

Creating financial tailwinds when facing economic headwinds

In a recent webinar on Master Your Mortgage to Master Your Money Hannah McQueen stated that “The most important trump card you have when it comes to trying to foster and cultivate financial success is forward momentum. And that forward momentum isn’t reserved to the good times. Anyone can be good in the good times. It’s what you do when you have headwinds.”

And the best way to navigate a headwind? Create your own tailwind and learn how to catch that wind.

Here are some ways you could do that.

1. Know what you’re facing

To get ahead of any headwinds, you need to understand what you’re facing. That way you can set strategies and tactics in place that will protect you from the worst of it.

If the headwind is increasing interest rates for your mortgage, start looking at the impact that will have on your cash flow. How much extra will you now need to pay for each repayment? And what can you do to mitigate some of that impact?

Our previous post How to combat the impact of rising interest rates and get ahead outlines some of the actions you can take with your mortgage to possibly ease some of the pain that will come with rising interest rates.

2. Don’t let yourself be distracted by some of the economic noise

If you know what’s coming – you’ll also have a better idea of whether it could have any impact on you. And if it doesn’t, you might be better off ignoring some of the noise.

If you’re not needing to refix your mortgage for the next year or two, for example, the current talk of rising mortgage rates may have little to no impact on your situation.

Instead, look for what opportunities there are for finetuning your financial position and growing wealth regardless of what else is going on.

3. Understand where your financial inefficiencies lie

Chances are that there will be some inefficiencies in your spending.

Amongst clients, we found that most of the inefficiencies were in the following four areas:

1 – Mortgage structure
2 – Insurance payments (paying more than what’s needed for more cover than what’s needed)
3 – Fixed costs (i.e. utilities)
4 – Food

We also sometimes refer to this as ‘lazy tax’ or ‘fritter’. Regardless of what you call it, these inefficiencies may come from not taking the time – in the case of utilities for example – to shop around and compare providers to see who offers the best deal. In other cases – like our mortgage – it may be because we don’t understand the best way in which to structure it in order to pay the least amount of interest possible.

4. Work to resolve those inefficiencies

Once you have identified any inefficiencies look at ways you can reduce them, or maybe even cut them out completely. We linked to suggestions on how to eliminate inefficiencies in your mortgage above, but what can you do in the other areas?

Could you talk to an insurance broker about your current insurance and how this could be optimised? Could you switch utility companies for a better rate? Could you make a commitment to only go grocery shopping once a week and stick to a list of what you need to buy?

5. Look for opportunities to grow wealth

If you’ve built a solid foundation and removed inefficiencies, then you’re in a great position to look at continuing to build wealth. During headwinds, we find that people tend to worry about whether it’s the ‘right time’ to buy, say, an investment property. But there isn’t really a right time. With the right strategy, the right purchasing criteria, and the ability to hold the property for as long as what’s needed – sometimes it’s more about selling at the right time than it is about buying ‘at the right time.’

There is, of course, no magic bullet when it comes to facing economic headwinds and coming out the other side, hair still perfectly coiffed. Creating a tailwind is about being smarter with what you’ve got and being tactical with the options you have available to you to improve your situation. That’s where the tailwind will come from.

Ready to watch your financial future take flight? Book a consultation with an financial adviser today to get a better understanding of where you’re at, the opportunities open to you, and how could help you take full advantage of them. (A fee applies).

Disclaimer: This blog post is for informational purposes only and does not constitute individual financial advice. If you’re interested in receiving personalised financial advice, you can book in a consultation with an coach. Costs apply.


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