There is no secret to the fact that 90% of Australians struggle with getting ahead financially, and don’t have an adequate strategy to retire comfortably.
A recent analysis from the Australian Bureau of Statistics data, shows people over 45 years old don’t think they will retire before turning 70. This number has sky rocketed from 8 per cent to 23 per cent in just 10 years.
Another contributing factor to Australians not retiring well is we are ageing in a much healthier fashion and therefore living longer, which equates to more money required in retirement and albeit being forced to work longer. Also some changes to superannuation and the age pension from the May budget has sparked fresh concerns that a comfortable retirement is now out of reach for hundreds and thousands of Australians.
For most of us though, it’s about establishing the fact we need to take additional steps to gain a secure financial future, and then its about getting some education and help on how to go about it, and most importantly taking action to implement the changes well before retirement is upon us.
5 Steps to Gain Control of Your Financial Future
1) Setting Specific Financial Goals
Establishing and setting your financial goals is always a good starting point, this is your road map to your financial success. Setting your financial goals is about starting where you would like to finish and working the plan backwards. For example your goal could be you need $70,000 per year in retirement income to live comfortably , with your current assets you are only on track to achieving $25,000 per year and heavily reliant on the age pension , thus means your financial goal is that you need to have a strategy to accumulate the other $45,000 per year in passive income to reach your retirement goal. What’s your strategy?
If you currently don’t have one, you seriously need one, the saying is “If you are standing still you are going backwards”.
2) Consolidating your Superannuation Funds
Most Australians have had more than one job and would therefore have more than one Superannuation fund. What happens is if you have ever changed your name, address or job, you may of lost track of your super. When you have multiple superannuation accounts you are paying fees and insurance premiums on all the funds, and its just reducing your overall super investment nest egg.
It could be the case where you have lost super accounts , you can open an account on the myGov website and track your lost super.
3) Having a budget and savings plan
This is an important step to achieving financial security, having a budget planner allows you to clearly track exactly where your money is going and what your surplus cash flow position is on a weekly, monthly and annual basis.
The science behind budgeting and having a savings plan enables you to sort out your money priorities and find the right balance between spending and saving.
Once you establish your surplus cash flow after your week to week living expenses, you can see how much you can afford to invest per week towards your financial future.
Benefits of using a budget planner:
- Pay off your home loan Faster
- Budget for a family holiday
- Pay off a credit card
- Establish if you are living within your means
- What is your weekly surplus cash flow amount you can invest to create your wealth
- Budget for school fees
Your financial success is not totally driven by how much you earn, its comes down to your choices and where you spend your hard earned dollars.
You can click here and access the Moneysmart Budget Planner and many other valuable tools that are free on the ASIC Website.
We advise you access this at your earliest convenience and get started with a budget and track your spending.
4) Having an investment Strategy
Once you have been through all the steps and established that what you are currently doing is not going to be enough for a comfortable retirement, its time to take action with a suitable investment strategy that will assist you in reaching your retirement goals.
Australian residential property is a powerful investment vehicle that many now wealthy people have used to create significant wealth. Property is a tangible asset and happens to be biggest asset class in Australia with a total value of 6.7 trillion dollars. It also has a proven track record for capital growth, rental growth and has the ability to significantly reduce your tax if you buy the right properties.
Why property for an investment vehicle:
- You can buy property with a small deposit to get started
- You can borrow for everything, including your deposit if you have equity
- Proven track record for capital growth and rental growth
- Reduce your tax
- Create a passive income
- Residential property will always be in demand due to population growth
- It’s an asset that you can easily measure it’s performance
- Get your tax deductions weekly in your pay packet
- Property is not as volatile as shares as it does not have the liquidity that shares have.
- It can be leveraged against to compound your wealth
Being successful in building financial wealth is getting educated, creating a plan and taking action.
5) Financial Health Check
Its always advisable to get a financial health check on an annual basis, thus to ensure you understand your financial capacity and whats achievable for you in regards to building your financial wealth.
- Home loan review – Interest rate and product review, this can save you thousands of dollars every year.
- Whats your current loan to value ratio
- Should you be paying interest only or principal & interest on your home loans
- How to structure your loans to maximise your borrowing capacity
- What is your borrowing capacity
- What is your current debt to service ratio
Get your free financial health check today by clicking here and filling in your details.
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