Tag Archives: invest

Five financial moves to make in your 40’s

In your 40’s? Here’s 5 moves to make so you can get financially ahead.

Being in your 40’s can involve balancing many different responsibilities and it becomes easy to neglect your own financial well-being. But it’s not too late to secure your future. Here are 5 tips that may help you financially make the most of your 40’s.

1.      Create a plan

If you don’t have a financial plan, then it’s totally time to get one. Ensure that it’s based on your needs and priorities. By working with a professional adviser, you may be able to tailor a plan that can help you maximise your ability to save and invest.

2.      Grow savings

Your 40’s could be your peak earning years, so it may be a good idea to ramp up your savings and funnel some of your income into superannuation or investment accounts. Be sure to do your homework and consult with a professional financial adviser about your options and reducing debt.

3.      Check your superannuation

A quick super health check may help you optimise your retirement savings. For example, by choosing a different investment option or type of risk, you may be able to earn better returns on your super. If you have a few funds, consolidating your accounts may help save on fees. Again, seek advice from a professional adviser before acting as you may leave yourself open to losing some important benefits.

4.      Avoid lifestyle creep

People usually have a tendency to inflate their standard of living as they earn more and can then afford more things, such as a better car or house. While it’s natural to want the finer things in life, you’ll likely end up with little to no financial gain if your spending rises as quickly or more quickly, than your income. Try stick to your long-term financial goals and remember the big picture.  You lived on your income until you got the pay rise or bonus, so chances are, you still can, and stash the difference.

5.      Invest more

Your 40’s may be a good time to invest more – or diversify your investments – to help you grow your long-term savings.  Keep in mind that it’s important to choose instruments that suit your risk appetite and time horizon. Developing a strategy with your financial adviser might make it easier achieve the return required to reach your financial goals.

My Top Financial Tip

If there’s one tip I’m constantly asked for, it’s what’s the best way to get on top of your finances?  And for me, that’s easy to answer – “Live Within Your Means!”  Good money management boils down to harnessing the cash flow and getting on top of debt – with the biggest gremlin being credit cards.

If the word ‘budget’ annoys you and has you running for the door, try ‘spending plan’ instead.  A budget/plan should be divided between fixed regular costs (those you MUST meet) and discretionary spending (the WANTS and nice to have stuff.)

Work out first what it costs for mortgage or rent payments, food, clothing, utility bills and loans.  This means you’ll have a much better idea of where you stand and how much you are spending on fun stuff like entertainment and non-essentials.

Losing the credit cards should be a top priority.  Learning that if you can’t afford it now, you can’t have it, is a great skill to take through life.  That’s not to say lay-buy or payment plans can’t work, but we need to move on from the ‘I want it now’ mentality.

Learn what you’re capable of when you’ve got less commitments like interest payments for items you’ve forgotten that you’ve even bought.  You may be pleasantly surprised at what you can achieve with better spending and saving habits.

Did you know, that if you’re 25 and have a nest egg of around $5000 and you’re able to save $50 – $75 a week at around 7% average interest (compounding over the long-term) you could have yourself a cool $1 million by retirement at 65?  It might be a while off, but it does highlight the opportunity cost of spending around $200 to $300 a month on eating out, movies, drinks and ‘stuff.’  Add that to your compulsory super and that’s not a bad way to enjoy post-work life.

Most however don’t really start thinking about retirement until they’re 40 plus and suddenly realise they’re half way through their working life and have been wasting the ready for over 20 years.  It’s time to analyse those poor financial habits now!

Reducing debt and saving as much as possible is imperative if you want to maintain a certain standing of living both now, and when you retire, and living within your means makes life a lot easier.  Life without ongoing financial stresses also helps you sleep easier now. Chances are, the Centrelink age pension will be harder and harder to come by and eventually disappear.

It’s up to us to take charge of our financial future, and the sooner, the better.  Living within your means from now, is vital.  Are you?

The Thief of Time

Do you have an issue with procrastination?  Do you often put off until tomorrow what could be done today?  Is there a particular area in your life that you constantly procrastinate on?

Choosing not to take advantage of the opportunities available in investment world and constantly putting off starting, can be a great source of procrastination for some.  Even if we have the best of intentions, we can be merrily led down the garden path of postponement, especially with all the noise and conflicting news going on in the media.

Any slight breeze of a downturn, or rustle of doom can easily spook a big investment decision and when you add a touch of worried advice or hyper-concern by those we love, procrastination blooms in all miserable glory.

However, if you do have the intention to start investing, whether in property, the share market or managed funds, along with the research and knowledge to back it, the hesitation gap provided by the fearful usually generates the best market opportunities.  That’s often when you need to make that gutsy decision the most.

Always remember, that the best way to start something, is to begin!

Make sure you don’t get caught up in all the hype out there and take the appropriate steps to invest in your future now.  Most long term investors will tell you that it’s not about timing the market, but time in the market.  Will you be bold enough to make the decision to invest?

Advisers can be a great tool to assist you in implementing your portfolio and helping you past the procrastination blues.