Having a plan
One of the first steps to building wealth is having a clear understanding of where you are now, and where you want to be in the future. Dreams without goals are just dreams; and your goals, financial or otherwise, are not achieved without a plan.
When it comes to your finances, it’s been said that the average Australian spends more time planning their holiday than planning for a secure financial future. Having a financial plan in place at any age can help you secure your financial independence, give you peace of mind, and ensure you are free to enjoy a long and rewarding future.
There are many good reasons for adopting some basic financial principles and establish a long term financial plan. Here are a few good reasons to get you started:
It will help you explore and define your financial priorities.
For individuals this can help you gain clarity and focus. For couples this exercise alone can be enough to give you an insight into what is most important and hopefully put you on the same footing allowing you to develop a plan for the road ahead.
It will help you determine whether your goals are realistic, taking into consideration your time frames and any conflicting priorities.
When examining your financial goals your adviser can help you put things into perspective and help you take both a short term and long term view. Most goals are attainable provided you have a clear understanding of the impacts of time and resources on your ability to achieve successful financial outcomes – some goals will take years to accomplish.
It will help you identify risks.
Part of a financial plan is looking at your tolerance to investment risk, and more importantly, your current capacity for taking risks: noting that in cases where you suffer a substantial financial loss, your ability to recover from the loss and still be able to meet your long term goals such as a secure retirement.
It will help you see how you can bring your spending in line with your goals and show you what money mistakes you might currently be making.
Are you spending too much to finance your current lifestyle and what debts do you currently have? Credit card debt at 18 to 20 percent can consume large amounts of your take home salary in servicing costs and funds needed to pay the debt off. Alternatively, are you aware of where savings can be made? Two cups of coffee a day during the working week can amount to nearly $2,000 a year in discretionary spending, add in a take away lunch and you can increase the amount to close to $5,000 per annum.
It will allow you to measure your progress on the achievement of your goals.
Goals unlike dreams or wishes should be both measurable and attainable and you can establish a variety of benchmarks to make sure you remain on-track to achieve the desired outcome.
It may help you find new ways to make your money more efficient.
The impacts of tax on your savings and the choice of the right tax environments into which you may invest can have a dramatic impact on your ability to reach your stated goals. Superannuation investments for instance are usually taxed at 15%, as compared against investments outside superannuation which may be taxed at 45% for higher income earners.
It will help you build wealth over time and live more comfortably.
Those with a plan in place are both more likely to have reduced debt as well as increased savings. There is also the likelihood of being able to live more comfortably in both the short and longer term.
Developing a financial plan can be daunting. Whether you are young and single, have a family, empty nester, or retiree, it is imperative that you seek financial advice tailored to your individual needs and objectives to assist in securing your financial future.
If you don’t already have a financial adviser, Lifespan can help find a planner who will advise you on the best ways of getting started to build wealth, and secure your family’s financial future, whatever your personal circumstances may be.
Get started today, Click here to find a local Lifespan financial adviser and organise a free, no obligation discussion about your financial future.