Tag Archives: Wealth

So, you’d like to be rich?

So, you’d like to be rich?

I hear you!  Like many, the lure of ‘enough’ in the bank is strong.  And ‘more than enough’ is even better!  That’s rich!!  But if you’re living in a developed nation, chances are you’re already wealthy.

Oxfam tells us that just 1% of the world’s population hold 48% of the worlds’ wealth!

But let’s get real, rich and wealthy certainly don’t mean the same thing.

Some might consider wealth as the amount of money you have in the bank, or your net worth when looking at the balance sheet.  But, others consider wealth in its many and varied ‘other forms.’

Do you have a roof over your head that you can afford?  Food available every time you open the pantry or fridge door?  Are you surrounded by happy, healthy loved ones?  Is affordable health care within reach?  Do you have enough, even too much ‘stuff?’  Are you able to afford transport costs, TV, a phone and wifi, along with little luxuries like movies, a night out or special entertainment treats now and then?

Some consider true wealth to be measured by what you have left if you lost your material possessions.  And it happens.  Australia especially is a nation dominated by extremes like floods, famines and fire.

Would you still have a loving family and fulfilling relationships if all else was lost?

From a very young age, marketers have bombarded us into thinking that we never have ‘enough.’  That last year’s fashions, bags, sunnies and possessions are so out of date and that we are continually told we need more… newer and better.  But as many find, striving constantly for the latest, and chasing labels is hardly the key to happiness.

Working out what makes us happy is a huge step forward in unlocking how we can discover wealth.

Do your children’s smiles light you up?  Do you have a hobby you find fulfilling?  Does your faith hold you steady when times are tough?  Is there one friend or partner you always enjoy spending time with that ‘fills your cup?’  Does holding a fulfilling job mean a lot to you?  Chances are when you work out what it is that truly makes you happy, you’ll find you’re pretty wealthy after all.

 

Diana Princess of Wales  “They say it is better to be poor and happy than rich and miserable, but how about a compromise like moderately rich and just moody?”

 

Managing a Financial Windfall

We’ve all got that dream – we’ll have that massive lotto win, Great-Aunty Betty will die and leave us everything… or even that a spectacular tax return or bonus will come our way.

Although they’re aren’t regular occurrences, financial windfalls can come our way now and then… so instead of blowing it all, what’s the bet way to take advantage of a bonus or extra dollars that come our way?

The temptation to splurge can often be overwhelming, but your future self is hardly likely to thank you for replenishing a wardrobe or buying more “stuff” that is likely to end up in a charity bag in a year or two.  So what are some eminently sensible and grown-up ways of making that money work harder?

Here’s a few ways to spend this money that will give you long-term benefits.

  • If you have debt, especially non-deductible debt like credit cards or personal loans, pay them down first, followed closely by long-term debt like your Mortgage
  • If you’re really not sure what to do and everyone is putting their two cents worth in and confusing you ever more, put it in a high interest savings account until you can do some research and be comfortable with your decision
  • Can you put a bit extra in your super?  Retirement might be a long way off, but that means you have the benefit of long term compounding interest in your favour
  • Is there enough for you to start investing?  It may be worth kicking off a portfolio of shares, property or managed funds if there’s enough.
  • Getting financial advice can be of great benefit.  Financial professionals often have access to funds and research that are unavailable to many and they can ensure that you invest in line with your risk profile, not putting ‘all your eggs in one basket.’
  • Have you put off personal protection strategies like income protection, trauma cover or health insurance?  It may be worth investing in looking after yourself
  • Have you considered taking time out and learning new skills?  Maybe it’s time to invest in yourself and do that course.  Who know’s a career change might be just what you need!

And if you’d really like to still blow just a little of it – set a limit – maybe 10 – 20% and knock yourself out.  Have that splurge, but be smart too.

Do something that your future self with thank you for.

 

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?

When should I start Investing?

I’m often told, “when I have money, then I’ll come to see you…”

I take this to mean that most people really aren’t sure about why they should see an advisor or believe that they only help people  who have funds to invest.  Not always true!

So, if you’re someone who isn’t really sure about when to start, here’s a few questions you can ask yourself to see how you’re tracking…

  1.  Do you live within your means and spend less than you earn?
  2. Are your personal loan payments up to date and credit cards paid off monthly?
  3. Do you have an emergency fund for a rainy day?
  4. Are your personal protection plans in place, covering your life, health and income?
  5. Are your superannuation funds all consolidated and invested in line with your risk profile?
  6. Are you comfortably repaying debts like a mortgage and could still manage to do so if interest raise increased?
  7. Do you have a regular savings plan now?
  8. Is there a specific goal that you’d like to achieve with an investment plan?

If you can happily respond with a Yes! to all these areas, chances are you’re ready to roll!  If not, see where you can improve your current situation before taking the leap.

Investing for many women requires a bit of soul searching.  What’s the purpose of the investment?  Is it just long term growth?  To achieve a holiday goal?  Extra savings to supplement retirement income?  To save for your children’s education?  Is paying down debt a higher priority?  Often, these reasons or needs require different time frames for the investment and different levels of risk that you’re prepared to take.

Share market and property investments are typically viewed as long term investments (five to seven years plus) and for those with a more assertive or aggressive profile.  Cash, term deposits and fixed interst styles of investment often mean a shorter term need is to be met, where preservation of capital is paramount.

An adviser can help you articulate your goals and work out your risk profile.  Chances are, you may invest very differently with your superannuation savings than you would for that trip you’d like to take next year, amd each rqeuire a very different strategy.

If you’d like to find out your Risk Profile, drop me an email and I’d be happy to forward you a questionnaire to see where your levels of tolerance sit.

Why chat with an Adviser?

With only around 20% of Australians thinking it’s worthwhile seeking professional financial advice, it begs the question – ‘what’s in it for me?’  ‘Why would I see a financial adviser?’

And I can give you 6 pretty good answers to that question!

Firstly, seeing an adviser can help you set and achieve personal financial goals.  Sure, you can do that on your own… but do you?   Most of us fare much better when we share our goals and feel accountable to someone for achieving them.  But then, some never think to set financial goals or have a clue about achieving them.  This is where an adviser can provide much value.

Secondly, we can help you make the most of your money.  Chances are, if your like most you live first and save last… if there’s anything left over.  Advisers can assist with salary packaging, planning, tax minimisation and ensuring you get paid and get to save.

We also know a bit about Centrelink, and have helped some who didn’t even know that they were entitled to the Pension or an Allowance to be able to claim what they’re entitled to.

One of my favourites tho is assisting you to feel more in control of your financial situation.  Knowing that you’ve got a plan, someone to keep you on track and that each year you can see that you’re getting ahead, is priceless!

We all make mistakes, it’s a part of living and learning.  But some of them can be extremely expensive.  Being able to run business, investment and financial deals past an expert who knows their numbers can potentially save hundreds or even thousands of dollars in expensive mistakes!

And finally, we know all about protection.  Having a brilliant financial plan is no good if all that you’ve already worked so hard for isn’t protected.  Ensuring that your own life and the wellbeing of your loved ones is taken care of means real peace of mind.

Now, aren’t they 6 good reasons to make an appointment today?

 

Do you insure your biggest asset?

It’s a sad fact that most Australians are dangerously under-insured.  And It may just be high time you reviewed your levels of insurance protection!

Take the example of Matt.  He is a clean-living 53-year-old who exercises regularly, doesn’t smoke, enjoys a healthy diet and only indulges his love of good wine at the weekend.

Yet things changed suddenly for Matt last year when he awoke one night to find he couldn’t breathe. His wife called for an ambulance and he was rushed to hospital, where he was taken into life-saving surgery following a heart attack.

After waking from his operation, Matt was in shock. He knew there was a family history of heart disease, but had gone to great lengths to prevent the onset of the illness and had definitely not properly thought through how his family would cope without him.

During recovery, Matt reviewed the insurance component of his super and discovered that in the event of his death his family would receive just $300,000, which would barely pay off the mortgage. He hadn’t taken into account daily living expenses, car loans, and his daughters’ school fees, his wife’s low income or their inadequate savings.

Fortunately for Matt, his story is a positive one. Now in better health and back at work, he has spoken to a financial adviser and taken out additional life insurance, albeit at a significant premium following the heart attack. He and his adviser are looking into critical illness cover, which would pay out a lump sum should he suffer another sudden illness, although he’s likely to now have a coronary exclusion.

Unfortunately, in Australia, Matt’s story is not uncommon.  Surveys have shown Australia has much lower levels of insurance than other developed nations including the United States and United Kingdom [1]. The required level of life insurance is now about $680,000, while the typical default cover is around $258,000 – a significant gap [2].

Maybe it’s time to ask… could your family make ends meet if you were unable to work, suffered a serious illness or died? Here are some things you should consider:

  • Ongoing Mortgage or rent payments
  • Daily living expenses – food, bills, transport, utilities, insurances
  • Childcare, school and university fees, text books and accommodation
  • Other expenses – house repair costs, medical expenses, personal health & grooming, replacement of white and brown goods

Make an appointment with your financial adviser to discuss your insurance needs and ensure you are adequately covered, or call the team at Wealth Planning Partners to discuss your needs on 07 5593 0855.  They help clients Australia wide with their protection strategies.

 

[1] Lloyd’s Global Underinsurance Report 2016

[2] Rice Warner Underinsurance Research Report 2014

Do you have a Financial Blind Spot?

Blind spots are the parts of ourselves that we never really see,  (or the parts we really don’t want to see) despite all our best efforts to become mindful.

Sometimes, we need a little assistance from our friends or family to help see what we really need to see.

It’s worth asking someone that knows you well what they see you doing or believing that you do that hurts you in some way.  That might be a scary ask!

Is it a story you have about yourself? Is it a mindset about money?  Could it be overworking,?  Or overeating? Or overspending?  Do you not stick to your budget?  Have you neglected your protection strategy?  Do you need update your Wills?

Give permission to a friend or family member to be totally honest with you today… and try very hard to be ok with the results.  It’s just an area that’s worth working on and improving for you!