A New Year’s Resolution for your Financial Future
At this time of year, people often have time to focus on their finances; overspending at Christmas, credit card debts, holiday expenses – all bring financial issues front of mind. So what about your future wealth?
In Paul’s words
‘New Year is a great time of the year to actually look at your wealth. Most of us are very busy up to Christmas and then you’ve normally got a couple of weeks off where you’ve got a bit of time to relax and think about where things are with family.
‘Most of us, at this time of year see older relatives, some of whom have retired really really well and enjoy life the the full. Then there are others who have not retired so well. Maybe they’re on the pension, and they can’t do what they want to do – they can’t do the travel, they can’t buy that car, and they can’t have the lifestyle choices that they want.
‘If you want to have great choices when you are older then you’ve got to start making some wise choices now.’
What can you do to take a step forward into a great financial future?
According to Paul
‘The first thing you have got to do is sit down and work out how much money you are going to need to retire. Most people, to keep their current lifestyle, need somewhere around $100,000 a year as a couple, some need less, some more. But to do that, for thirty years of retirement, you don’t need to be very good at maths to know that that’s well over $2 million. Because you don’t want to sell down your family house as part of your retirement fund.
‘The next thing is to work out how much money you’ve got. If you’ve only got around $200-300K in a Super fund, then obviously that’s not going to be enough. So you’ve got to start actively planning now to find a way to grow your super and grow other investments so that at 60 you’ve actually got the choice of whether you can retire or not. Some people like to keep working but it’s great to have that choice.’
Is Financial Planning just about getting more assets?
‘There are a couple of different ways to reach your financial goals. The first is to grow your assets. If you have $500,000 of assets and they make 10% over the year, then that’s $50K. Whereas if you’ve got $100K, then that’s only $10K. So when it works on percentages, the more assets you have to start with then the greater return you can get – the greater build you can get on your assets.’
When is a good time to start Financial Planning?
‘You have to start somewhere. The earlier you start, even if it’s only small amounts, it grows and you’ll have a much better result. Rather than just saying “Oh, it’s too hard, I’m not going to get anywhere” and then all of a sudden you’re 2 years from retirement and you can’t afford it, it’s better to start now.’
What else can I do?
‘There are other things you can do. You could cut some expenses, but you really have to get that balance. You know there might be a couple of things you don’t really need to do – it might be smoking, the extra night of takeaway that week or the second or third coffee that you buy that day… All those sorts of things can add up over time, so cutting expenses is good, but you do need to keep that balance because you need to enjoy life now as well.’
What about investing?
‘Investments are good – some people take property, some take shares, probably a mixture of both is good. The main thing is to have that discussion now and start planning for the future.’
How do I start?
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