The simple answer is that if you don’t have a financial plan, then the best time to start is right now. Every day you don’t take control of your finances means a lost opportunity to build your wealth and be financially independent. Did you know that over 75% of people say they need a financial plan, but only about 25% of those people have a written financial plan.
The simple things can be the most effective
Everyone is always busy, and it is so easy to use this as an excuse to put off doing the things that in the long run will make a big difference to your financial well-being.
There are things you can do today that will only take a few minutes. Here are three things you can do today.
- Review you Superannuation Account to ensure the investment plan suits you. While you are still some distance from retirement, changing from the default entry to say one of ‘High Growth’ could give you a higher return. Over twenty years just one or two percentage difference in investment return will affect your retirement income. While higher returns can mean more risk, superannuation funds operate under strict rules and are unlikely to put your savings at risk.
- Take the initiative to cut waste in your daily living. This can be as simple as taking a packed lunch to work or cutting out one take-away each week.
- Open a Managed Fund with low fees such as an ETF and arrange an automatic deposit each month to the fund.
Understand your spending habits
MoneySmart says there are three things you should do:
- Track your spending and expenses: They suggest you start small by tracking everything you spend each day for a week so you can see where your money is going.
- Look at your spending habits
- Change your spending habits
Go to your app store and download the MoneySmart Track Your Spend. This is a simple way of tracking your spending habits and then follow through with analysis of your spending habits.
Pay down personal debt
If you have credit card debt that cannot be repaid at the of each month. Your first priority should be to pay off this debt as quickly as possible.
If you have personal loans that allow you to make additional payments this should be your second priority. However, be aware some personal loans have high penalty costs if you pay out the loan before time, so check if this applies to your loan.
Make a rule that you will never have any personal debt. If you want something like a holiday, then set yourself a savings plan to save the money before you purchase it.
Make a budget
Now that you have analysed your spending habits, you should create a budget for your living expenses.
It is a good idea to “pay yourself” first, by allocating a percentage of your income to investing. Home-ownership should be considered part of your investments. As the interest on the home loan is not tax deductible, it makes sense to pay down this debt first.
Educate yourself
There are plenty of easy-to-read books on managing your money. Good Financial Reads has reviewed many of these books and is an easy way to find something that suits your interests.
Try to read one book a month and over time your knowledge and understanding will develop, giving you more confidence to selecting ways to invest that make you feel comfortable. Never invest in anything you don’t understand.
Buy Financial Mappers
If you want all of the above and much more, consider a small investment that will reward you for years to come. All software has a learning curve, but taking the time to understand and use the software will be time well spent.
With Financial Mappers you have a cashflow modelling tool, but also a financial literacy program, and over twenty automatically generated reports based on the financial plan you have created. You can also create multiple financial plans and then compare the outcomes.
Now is the time to take control of your financial future.
Watch the video to find out why you should have a Financial Plan.
Glenis Phillips SF – Designer of Financial Mappers
Disclaimer: Financial Mappers does not have an Australian Services License, does not offer financial planning advice, and does not recommend financial products.
