If you have ever planned a long trip, you will appreciate the importance of a good map. Of course, the purpose of a map is to help you find your way to where you are going: as if you don’t know where you’re going, any road will get you there.
Like a map, your financial plan is designed to help you define and then provide the best route to your targeted destination (achieving your financial goals).
Your goals could include anything from paying off your mortgage to paying for your children’s education. Importantly, these goals should be specific and have a time frame for when you’d like to achieve them. Your goals should also be prioritised, so you can focus on what’s most important to you.
It’s never too early to start thinking about planning for the future. Spending a few hours wisely now could help you make your earnings last well into the future.
Investing is an essential part of helping you create wealth. Over the long term, investments can generate great rewards – and the earlier you start, the better.
Investing starts with ensuring you have surplus cash flow from your daily living expenses to invest. It doesn’t need to be much, but if you focus on developing (and sticking to!) your household budget, you can soon find savings that can be invested to help build your future wealth.
Having the right superannuation strategy in place today is absolutely essential to a comfortable retirement.
Taking an active interest in your superannuation early is key to ensuring you can achieve this goal. How much super you need to enjoy a comfortable lifestyle in retirement will depend on factors such as your accumulated assets and your expectations. Chances are your employer contributions are not going to be enough and you may need to look at making additional contributions.
The good news is that if you start early, even minimal personal contributions will make a significant difference to your retirement income. Personal contributions to your superannuation can be made from your pre-tax salary (salary sacrifice) or from your post-tax salary. Note different taxation rules apply to each method of contribution. Depending on your financial situation, one may be better for you.
Managing your Debt
Being in debt is not always a bad thing! Debt allows us to buy things that we would otherwise not be able to own and enjoy, like the family home. What’s more, using debt the right way can be a great way to create wealth and reduce tax along the way.
The trick is to make sure you’ve got the right type of debt, and that this debt is working for you in ways that will help you achieve your financial goals and objectives. This might include paying off debt that is not helping you ‘get ahead’ (for example, your credit cards): or it might even include borrowing to invest (and ensuring the interest is tax deductible).