Tuesday, April 26, 2016

You are the most important person in your world

And don't let anyone tell you otherwise.  No, this is not a feel good Pinterest quote for the down and out, it is one of those self-evident life truths.  The only person who can make change in your life is yourself.  The only person that you can truly rely on, is yourself, and so this brings us to our seventh lesson from George Samuel Clason's "The Richest Man in Babylon".

Lesson 7: Invest in yourself

As pointed out in Lesson 4: Insure Yourself (Life is a game of Russian roulette, Feb 15 2016), your biggest asset is you, and so it makes sense that you invest in your own wellbeing and potential.  This can be interpreted in many ways, and we hear it often.  Invest in your health by eating well and exercising.  Invest in your own sanity by taking time for yourself, whether this is reading a book, getting a massage or spending time with your friends.

Financially, the best way to increase your earning power is to invest in your own potential.  For instance, I am currently studying for my Masters of Financial Planning.  At first, I was resistant to the idea, after all, I have been in the industry for over 10 years, I hold a Bachelor's degree in International Business, a Diploma of Financial Services (Financial Planning) as well as various specific qualifications such as in SMSF and Aged Care.  Other than complying with the change in licensing regulations and a nice tax deduction, what could the Masters possibly bring me?

I am now onto my second subject (of eight), and have completely changed my tune.  As far as financial planning strategy goes, I doubt that this course will bring anything new to the table.  What it does do (so far), is make me delve deeper into the mechanics that go into business, such as the overall business plan, the marketing and the general approach to networking.  This will help me work more efficiently in my role as well as provide direction to my small business clients, which is a value add to them, and will make me a better financial planner overall.  This should, in theory, increase my earning power.

So, take the time to unlearn, learn and relearn.  If you are working at capacity and have hit your earnings limit, it may be time to work smarter rather than harder.  Take the time to improve your skill set, because it doesn't matter where you are employed, you own those qualifications and, as they say, knowledge is power.
By Erin Wright B.Int Bus Dip. FS(FP), Accredited Aged Care Specialist
Find Erin at Achieveit Financial Planning or call for an appointment on 07 4638 5011

Tuesday, April 12, 2016

Live in the moment by putting a future plan in place now

One of the benefits of having a financial planner is that they work to future proof your goals.  Financial planners think of the client's long term, so that they can live in their short term with as little stress as possible.  This is all reliant on the client providing the long term goals, or, at the very least, an idea of their end game so that the skills of the financial planner are utilised as effectively and efficiently as possible (and trust me...financial planners have a deep and abiding dislike of inefficiency). 

Lesson 6: Have a retirement plan in place

I often paraphrase Lewis Carrol's Alice in Wonderland, "if you don't know where you're going, it doesn't matter how we get there".  If you're a 25 year old earning $40,000 per annum, with a increase of 3% per year, and you have implemented all of the previous lessons, then by the time you are aged 50 your finances should (broadly) look like this:

Salary: $81,000, Investment account: $378,411 (return 7%, contributions increasing with salary 10%, earnings reinvested), Superannuation $309,241 (return 7%, contributions increasing with salary 9.5%, 15% tax on earnings, earnings reinvested).  Now, this scenario has assumed that you've remained single, and therefore it's unlikely that you will have purchased your own house.  Your after tax funds are $63,000, less your annual savings of $7,725, leaving your living expenses at around $55,000. 

If you had wanted to have the option of retiring at age 50, then you will have missed the mark. You cannot access your superannuation for another 15 years, and your investment account will only last slightly less than 7 years.  This means you have two options, work longer or spend significantly less over the next 15 years.

Your ability to meet your long term plans are impacted by your short term decisions, so it's important to plan your retirement outcome now, so that you can work out the milestones you need to achieve to get there.
By Erin Wright B.Int Bus Dip. FS(FP), Accredited Aged Care Specialist
Find Erin at Achieveit Financial Planning or call for an appointment on 07 4638 5011