Have you ever looked at your income versus your expenses and wonder where on earth all the surplus has been going? Getting a handle on the household budget is one of those tasks that people put into the “too hard basket”. But gaining and understanding of your finances and making better use of your surplus cash flow can result in amazing improvements to your long term wealth and lifestyle. The current superannuation scheme is just not sufficient in providing Australians with the retirement lifestyle that is deserved.
Our Money Management team are experienced finance advisors who are here to help you get an understanding of what your current cash flow situation looks like and show you where exactly your money is going. They can provide you with an immediate snapshot of your projected long term wealth simply by reviewing your current household expenditure and cash flow. With their strategic advice, you can see the differences that can be made by using your extra money to create a passive income to change your future outlook.
Frequently Asked Questions
How much does advice cost?
There are many areas in life where people recognise the value of specialist professional advisors, such as doctors or lawyers, but for some reason most people seem reluctant to seek the assistance of a specialist advisor when it comes to managing their money. A specialist advisor is going to be able to provide guidance, strategies and tactics to help you manage your money better and achieve a better financial outcome. Most businesses recognise the true value of professional advice and will happily pay a specialist to assist with planning and management of their finances. When you consider that over the course of twenty or thirty years most Australian households will have a turnover of multiple millions of dollars, it makes sense to think of your household as a business and give the management of household finances the attention it deserves.
How can I pay my Loan back as soon as possible?
Loans, particularly mortgages, are an important source of money in our lives. They enable us to purchase things that we would not be able to afford if we had to rely on the cash we had saved up. However, they come at a cost and the major cost is the Interest charged by the lender. Most people think that paying off a Loan as quickly as possible is the best way to reduce the amount of Interest they need to pay, but there are other ways and there may be many benefits of using sophisticated account structuring, in addition to minimising the amount of Interest charged. Use of a good account structure and money management strategies will not only minimise Interest but can also provide greater flexibility and control over the use of your money, allowing you to achieve a better outcome in the long run.
How much Property can I afford?
If Investment Property is going to be a part of your approach to wealth building, it is vital that it meets the objectives of your long term strategy. It is unlikely that your goal will be expressed in terms of the number of properties required; it is far more important to consider the value of the assets, the rate at which they are growing in value and the passive income they are delivering to fund your desired lifestyle, rather than simply how many properties you have. Unfortunately, relatively few people who start out to build wealth through investment in property will have taken the time to formulate a Goal and a Plan, and this can result in people buying too many of the wrong properties, rather than a portfolio designed and structured to meet their financial and lifestyle goals.
How can I make more money?
A good account structure and effective money management strategies will enable you to put your money to work from the day you receive it until the day you spend it (or even longer). The most effective thing that your money can be doing in the short term is reducing the amount of interest that you are paying on borrowed money, so that will be the first place to start. Once you have sufficient surplus cash to be able to make a greater return, that the interest being saved, it is time to start implementing your investment strategy to build wealth and meet your financial goals.
When do I need to get started?
Most wealth building strategies are going to be based on the idea of compound growth – investing in assets which will grow in value over time. There will be two factors which directly control the end result – the rate at which the asset grows in value, which will be determined by the nature and choice of the asset, and the amount of time it is held, which will be determined solely by how soon you get started. So getting started as soon as possible will lead to the best outcome, provided you have first taken the time to determine your goals and your strategy to ensure that the choice of assets is the most suitable for your Plan.
Will I have enough money in Retirement?
Understanding the level of Income that will be needed to provide the lifestyle you desire is the first step towards financial freedom. Working out what type and amount of investment assets will be needed to generate this income stream then forms the basis for a wealth building strategy to deliver the investment assets which in turn deliver the passive income stream.
Will my Superannuation be enough?
It is widely acknowledged that the amount of money currently being contributed to superannuation under the Superannuation Guarantee Scheme falls well short of that required to provide the wealth base that will be needed to provide the future income that most people will want or need, which is why the contribution rate is to be increased from 9% to 12%. However, even with the benefit of 12% superannuation contributions for your entire working life, the resulting superannuation balance is still likely to fall short of the level required. Developing a Goal for your desired lifestyle will quickly let you assess whether your superannuation is going to meet your target, or whether you will need to take other action to build a wealth base large enough to provide the level of passive income required to pay for your desired lifestyle in Retirement.
Where does all my money go?
One of the keys to success of any Plan is to measure your progress. Having a simple but effective way to see how you are going on your wealth building journey is essential. Use of a good account structure and money management strategies will enable you to see whether you are on track, and enable you to take early corrective action if things aren’t going to plan.