“Health,” wrote Ralph Waldo Emerson, “is the first wealth.” He’s right, of course. All of us would choose health above wealth, but we don’t get the choice when it comes to life threatening illness. Disease has no regard for financial status. Unfortunately, though, finance also has no regard for disease.
While patients, quite rightly, want to focus on their treatment rather than their superannuation contribution strategies, the money worries don’t disappear with the diagnosis. In fact, serious health issues tend to compound financial stress, which in turn can make recovery even more difficult.
It’s vitally important, then, for anyone fighting serious illness to have a clear map for managing their money through what may be a long road ahead.
Individual circumstances vary widely, but many people facing serious illness are hit with the double whammy of increased costs (for example, travel and accommodation expenses associated with treatment) and lower income as employment either is paused or scaled back.
Generally, those common, seemingly-complex financial symptoms can be treated via a simple five-step process that attacks the root causes of any money disorder – budget; Centrelink; debt; Superannuation; and estate.
Everybody should have a budget – a brutally-honest picture of their bottom-line.
Today there are many online budgeting tools to guide people through what can be a confronting number-crunching exercise.
However, if you don’t know where you’re starting from it’s hard to know where to go next, although for many the next step will be in the direction of Centrelink.
Centrelink provides a number of support mechanisms for people suffering severe illnesses – most notably, the Sickness Allowance. However, the offer comes with a byzantine set of rules that limit access based on income and assets, which is why Centrelink applications should be considered in the context of a person’s total financial situation covering debt and superannuation.
For example, it may make sense to pay down any non-mortgage debt prior to applying for government assistance: Centrelink will not deduct such debt from the asset test when weighing up an application.
Likewise, within super, there are many strategies covering factors such as insurance, Transition to Retirement (TTR) and accessing super early, which can help with cash-flow. However, the rules can be tricky to negotiate without professional financial advice.
Estate planning looms naturally as the final step. While we always recommend clients – whatever their stage of life – to have up-to-date estate plans, the question is undoubtedly more pressing for those dealing with life-threatening illness.
The good news is that medical knowledge and technology has greatly advanced our ‘first wealth’ and while it may be of a secondary order, financial knowledge can play a similar role in keeping our money healthy when we need it most.
ED: Nada Maticevic is a qualified financial adviser with Perth-based Integro Private Wealth.