DIY or Money Mentor?

DIY or Money Mentor?

If you’re a DIY kind of person, let me ask you this: Do you have the time to research all your investment and insurance options? Would you be able to look at your financial situation objectively? Could you crunch the numbers? Navigate tax laws? AND work your day job? 

Think you can't Save and Invest? Yes You Can!

Think you can't Save and Invest? Yes You Can!

Before I start this blog, I want to make sure you know what an Investorgetic® is. An Investorgetic® is a persona I created while writing Money Intelligence to counter the Consumerholic persona in our society. It's a term I coined that's made up of 2 words: investor and energetic. It means someone who is passionate about investing to build their wealth in a sustainable way. 

Think you can’t invest? Yes, you can!

Create your Financial Blueprint for a happy retirement

Create your Financial Blueprint for a happy retirement

When it comes to your retirement, it’s no use crossing your fingers and hoping for the best. You need to know exactly how much money you will need, and the steps you need to take, to achieve the retirement lifestyle you want. 

Protect your Wealth, Health & your Children

Protect your Wealth, Health & your Children

How to Become an Investorgetic®. The secret to becoming a Millionaire Series - Part 7

Before I start this blog, I want to make sure you know what an Investorgetic® is. An Investorgetic® is a persona I created while writing Money Intelligence to counter the Consumerholic persona in our society. It's a term I coined that's made up of 2 words: investor and energetic. It means someone who is passionate about investing to build their wealth in a sustainable way. 

Expect the unexpected: Protect your assets

Nothing in life is certain, and this is especially true for your finances. No matter how much you save or plan, sometimes things go awry. But there are steps you can take now to minimise the financial damage as much as possible.

Your wealth, health and family are intertwined. When things go haywire in one area, the others are impacted as well. If you neglect to safeguard all three areas, your future prosperity is compromised. 

Protect your wealth

When you’re focused on building your savings, protecting your wealth is often an afterthought. But if something unexpected happens, all your hard work and assets can go down the drain. It’s important you set up wealth protection mechanisms now to save yourself financial headaches in the future.

·      Get income protection: Your income is your most valuable asset. Most people insure their homes, yet fail to insure the highest income earner in the house. If you borrow to buy a home and invest, you cannot ignore income protection. It is usually covered under your name and the premium is tax deductible. Insurance companies often cover you for 75% of your gross income.

·      Life insurance and total permanent disability (TPD) insurance: Life insurance protects your family if something happens to you as an income earner. TPD insurance covers you if you have an accident and can no longer work. These insurances are usually covered by your superannuation fund. 

·      Get trauma insurance: If detected early, you could survive a serious illness such as a heart attack or cancer. However, would you be able to survive financially after paying the medical bills and taking unpaid leave from work? Trauma insurance usually covers medical bills and the 25% shortfall not covered by income protection insurance. Trauma premium is not tax deductible, but the payout is free if claimed.

·      Keep your debt level under control. An Investorgetic® doesn’t borrow more than he or she can repay. Most people borrow the maximum the bank is willing to give them. However, the bank’s method of calculating what you can afford is based on a formula that changes depending on whether the economy is running under a tight or easy monetary policy. You need to work out how much debt you can comfortably tolerate, rather than jump at the maximum the bank offers you. 

Protect your health

What is wealth without health? And how much will poor health cost you in the long run? No matter how much money you earn, you must be happy and healthy.

How many times have you worked overtime, skipped meals and exercise, opted for unhealthy foods, or missed important family events in the pursuit of ­earning more money? It’s easy to lose sight of what is truly important to us when we want to achieve our financial goals.   

Your financial success depends on your mental health and physical wellbeing. If you continually ignore your health, you risk physical or mental meltdown.

Make your health a priority. Exercise every day. Eat well, drink plenty of water and make time for family and friends. You’ll have more energy, be happier and save on medical bills in the long run.

Protect your children

I have heard horror stories of children not receiving their inheritance because their parents’ will was ambiguous, changed by other family members or not made at all. It’s vital that you make a will to protect your children and their interests.

When your circumstances change, your will is often the last thing on your mind. But it should be one of the first. If you remarry, ensure your children from your first marriage are looked after in your will, should anything unfortunate happen to you.

There are a number of legal and tax structures that allow you to pass down your family’s wealth. These include:

·      Family trust

·      Self-managed super fund

·      Investment companies

Seek legal and accounting advice when setting up these structures, and make sure they are aligned with your will.

Next week in the Investorgetic® series, I will show you how you can create your blueprint for financial liberation.

_______________________________________________________________________________

Susan Wahhab —CPA, SMSF Specialist, Entrepreneur, Working Mum, Small Business Supporter— is Australia’s leading Financial Strategist and Money Mentor. Susan is the founder and managing director of Accounting and Financial Services firm Winner Partnership Pty Ltd www.winnerpartnership.com  

Susan is the author of the transformational and practical book Money Intelligence®. Susan is passionate about helping people achieve financial liberation. At the age of six, she witnessed how her money-savvy mum (whom she calls the money manager) joined forces with her dad (whom she refers to as the money maker) to save the family business from bankruptcy and become financially free. Susan truly believes that people can become financially liberated by developing a healthy relationship with money. Buy the book in either printed copy or ebook and learn more about being money intelligent www.moneyintelligence.com.au

 

 

 

 

 

Inequality at home threatens Equality at work

Inequality at home threatens Equality at work

“It is a truth universally acknowledged that a single man in possession of a good fortune must be in want of a wife.” – Jane Austen, Pride and Prejudice

On 28th January, 1813, Jane Austen published Pride and Prejudice. More than 200 years later, her novel is still in circulation and is recommended reading for high-school and English-major university students.

Why is it that our post-modern society continues to be fascinated by a Victorian-era novel about women obsessed with finding a rich husband? Are we captivated by a love story between two young people? Or are we fixated on the fairy tale of marrying a rich man who can “save us”?

Love story aside, the clever and wise Jane Austen was tackling social and financial inequality; an inherent unfairness that caused middle and upper-middle-class women to be obsessed with “finding a rich husband”.

Property laws in 19th-century England unashamedly favoured men. A woman could not inherit her husband’s or father’s estate. Rather, it would pass on to the male next of kin. Women were at the mercy of male family members; hence Mrs Bennet’s obsession with finding single men “in possession of a good fortune” for her five daughters. What a cruel world it was for a woman.

We’ve come a long way, haven’t we?

We might still be infatuated with the fairy tale of love. We might still want to find our own modern version of Mr Darcy: a sensitive, new-age guy who understands and gives us what we need. But society has made significant progress over the past 200 hundred years.

Women can own and inherit property. We can start businesses. We can run corporations. We can make a decent, dignified living in all areas of industry. We can even become the Prime Minister or be ordained as a priestess. Is there any frontier we have not yet reached?

Yes, there is — and it’s closer to us than we think!

When couples see me for financial advice, each partner has their own version of financial reality. On average, the woman earns less than the man for similar employment. She also has 20% to 30% less super. This is due to a lower income and often having to interrupt her working life to care for children.

When I ask couples why they want to become financially independent, the man usually says it is to get out of the corporate machine and be “free”. Most of the women (mainly Gen X) say that they want to balance work and the home. Most of them — including women in senior corporate positions — wish to work part time.

This wish for part-time work is not about women wanting to “take it easy”. No, it’s a function of the inequality that working mothers face at home. They have given up hoping that their husbands will take a more active and equal role in the housework. Rather, they have settled for an arrangement where the man might take out the garbage, stack the dishes and occasionally mow the lawn. The bulk of the work is still done by the woman.

The burden of coming home at the end of an eight-hour workday only to cook, clean, do the washing and look after the children is enormous. Many women believe it’s the price they have to pay for pursuing their careers. They feel guilty about leaving their children in care so they can go to work, and atone this guilt by taking on the majority of the housework.

Meanwhile, the husband gets to enjoy the financial rewards of the extra — albeit lower — income earned by his wife, without having to work much more to get it. Odd jobs are a small price to pay to get an extra 81% of his salary.

Does this remind you of the heads of industry, who are happy for women to put in 100% effort while earning 81% of their male counterparts’ salaries?

“Injustice anywhere is a threat to justice everywhere.” – Martin Luther King, Jr.

Women’s liberation is still not a done deal. If it was, domestic disparity and the gender pay gap would no longer exist. The next step to true equality is for women to become empowered in their personal relationships.

I believe that what we think is a private matter — sharing the housework — is a public one. The men we deal with at work have wives, too. Persistent inequality at home means persistent inequality at work. We would not be having the same conversations about the gender pay gap in the workforce if we could deal with gender inequality at home.

Closing the gap is not just about money

This isn’t simply a financial transaction. For many women, their work is not only about the pay. They find fulfilment in making a difference, solving complex problems, and being productive and responsible members of society.

They also want to leave this world a better place for their children. They want to be good role models for their daughters and raise well-balanced, caring sons. But to do this, they need their male partners on board.

Continuing along the path of “women can do it all” is not the way to go. It’s silently killing us. Despite what we may think, it’s not keeping the peace at home or at work. Domestic disparity creates friction that saps a woman’s energy. It does nothing except keep us “in our place”. It victimises us and compromises what we believe to be true: that we are equal. It affects intimacy and personal relationships (“I am too tired tonight” impacts men too. They are missing out on intimacy. This is no win-win for anyone involved!). Is this what we want to teach our children?

Real, sustainable change can only be achieved by creating Winner Partnerships. Men and women must love, care and support each other to strive for equality in the private and public spheres. And it can be done. History tells us that injustice only lasts for so long. If we can reverse something so entrenched and discriminating as 19th-century property law, then we can close the gender gap at home and at work.

Financial independence can be achieved through equality. Remember, the true aim of financial independence is to ensure that we leave the world a more equal, just and prosperous place. Our girls and boys will thank us for it. They look to us to live their lives without fear; to live with purpose and meaning. They are waiting for us to lead them.

_______________________________________________________________________________

Susan Wahhab — CPA, SMSF Specialist, Entrepreneur, Working Mum, Small Business Supporter — is Australia’s leading Financial Strategist and Money Mentor. Susan is the founder and managing director of Accounting and Financial Services firm Winner Partnership Pty Ltd www.winnerpartnership.com

Susan is the author of the transformational and practical book Money Intelligence®. Susan is passionate about helping people achieve financial liberation. At the age of six, she witnessed how her money-savvy mum (whom she calls the money manager) joined forces with her dad (whom she refers to as the money maker) to save the family business from bankruptcy and become financially free. Susan truly believes that people can become financially liberated by developing a healthy relationship with money. Buy the book in either printed copy or ebook and learn more about being money intelligent www.moneyintelligence.com.au

Focus on Financial Liberation: Begin with Savings in Mind®

Focus on Financial Liberation: Begin with Savings in Mind®

Part 6 - How to Become an Investorgetic®. The secret to becoming a Millionaire Series

Before I start this blog, I want to make sure you know what an Investorgetic® is. An Investorgetic® is a persona I created while writing Money Intelligence to counter the Consumerholic persona in our society. It's a term I coined that's made up of 2 words: investor and energetic. It means someone who is passionate about investing to build their wealth in a sustainable way. 

Think you can’t save? Think again

There’s no secret formula to saving money. People who save don’t belong to an exclusive club. Anyone can do it. So the question is, what’s stopping you?

Saving money is the ability to understand the difference between essential and non-essential expenses. It’s the ability to budget, sacrifice unnecessary luxuries and commit to a long-term financial strategy. It’s about being in control of your money every single day.

Best of all, the more you do it, the easier saving money becomes.

What do you want and what do you need?

Take a close look at what you spend your money on. Is it vital that you start every day with a takeaway coffee? You may think you can’t function without it, but is this honestly true?

What about clothes? Take a stocktake of your wardrobe. How many clothes do you actually wear? Do you really need to buy a new outfit every month or two?

Too often, we confuse what we want for what we need. We complain about the essentials (rent/mortgage, food, car, insurance, electricity), yet we are quick to whip out our credit cards to pay for indulgences (weekends away, shoes, movie tickets, dinners out).

A $5 coffee each weekday may seem trivial, but it adds up: $25 a week, $100 a month, $1200 a year. This figure rises substantially if you also buy your lunch every day. Imagine the money you could save by not doing this!

Think like an Investorgetic® and look at the big picture. Saying no to takeaway coffees and packing your own lunch means you can easily pay an extra $55 a week on your home loan. This can reduce your home loan period from 30 years to 25 years! I must admit I cannot go without my coffee but I save by bringing my lunch to work. The take out lunch savings help me service the shortfall on an investment property (no kidding! Join me at my next Money Intelligence seminar to find out how).

What other expenses can you cut back for long-term financial gain?

Stop worrying about what others think

In our Consumerholic society, we’re encouraged to spend as much as possible on things we don’t need. We’re pressured to keep up with the latest trends and technology. And if we try to be prudent, we’re criticised as being “stingy” or a Scrooge.

Remember, it’s your financial future that’s at stake: you cannot afford to throw your money around simply to please everyone else.

Here are some easy-to-implement money habits that will help save you money:

1. Have a household budget and review it every year.

2. Know how much your monthly household expenses are.

3. Pay your bills on time to avoid late-payment fees.

4. Have a budget for the family’s clothes and shoes for the year.

5. Restrict eating out to a maximum of twice a week.

6. Budget and save for family holidays and non-essential expenses, rather than paying for them with your high-interest credit card.

7. Make more than the minimum repayments on your mortgage to pay it off earlier.

8. Go shopping with a list and stick to it.

9. Buy household supplies and groceries in bulk.

10. Never buy from telemarketers!

Being money wise doesn’t mean life has to be boring. It also doesn’t mean you can’t buy things that truly give you pleasure. The key is to prioritise what you need and the things that truly matter to you.

How you can start saving now

A good rule of thumb is to set aside 10% of your income each year. So if your after-tax income is $50,000 a year, this equates to about $416 a month. 

If this seems too much, start smaller. All it takes is $50 a week. Place this into an interest-bearing account you can’t touch. After a couple of months, try building on it. Increase the amount you set aside by $10 a week, every two months. Watch your savings grow!

Next week in the Investorgetic® series, we will look at why building your wealth is not enough. It’s essential that your assets, health and family have adequate protection. 

_________________________________________________________________________________

Susan Wahhab —CPA, SMSF Specialist, Entrepreneur, Working Mum, Small Business Supporter— is Australia’s leading Financial Strategist and Money Mentor. Susan is the founder and managing director of Accounting and Financial Services firm Winner Partnership Pty Ltd www.winnerpartnership.com  

Susan is the author of the transformational and practical book Money Intelligence®. Susan is passionate about helping people achieve financial liberation. At the age of six, she witnessed how her money-savvy mum (whom she calls the money manager) joined forces with her dad (whom she refers to as the money maker) to save the family business from bankruptcy and become financially free. Susan truly believes that people can become financially liberated by developing a healthy relationship with money. Buy the book in either printed copy or ebook and learn more about being money intelligent www.moneyintelligence.com.au

 

Don't underestimate the power of tax strategies...

Don't underestimate the power of tax strategies...

Part 5 - How to Become an Investorgetic®. The secret to becoming a Millionaire Series

Use the tax system to your advantage

The tax system strikes fear and loathing into the hearts of most Australians. Paying tax is a burden we grudgingly bear, but what if you could harness the tax system for your financial benefit?

The good news is, you can.

Australia’s tax system is set up with the investor in mind. How cool is that?! Most people don’t realise this. The government wants you to succeed. It wants you to invest and future proof your financial position. That’s one less person needing the age pension!

Paying tax is a fact of life. So why not make the most of the tax system to invest and build your wealth?

Take a long-term view of your tax strategy

A solid tax strategy helps you minimise the amount of tax you pay so you can put more money into your nest egg. For a tax strategy to work, it needs time and commitment. Good things don’t happen overnight. You must take a long-term approach to your tax strategy, just as you would with your savings strategy. 

There are many tax strategies and opportunities available to you. What you choose to take advantage of depends on your unique situation and you should consult and accountant/ tax/ financial advisor for advice. Tax strategies include:

• Superannuation strategies: By salary sacrificing extra super out of your wages, you achieve two objectives, first you reduce the income tax you pay on the wages and you increase the balance in your super fund for future retirement plans.

• Investment property strategies: Under your name/unit trust negative, positive and neutral gearing.

• Investment property strategies (commercial, residential, car parks and rural land): In your self-managed super fund (SMSF).

• Share investment strategies: Investments in Australian shares/managed funds to take advantage of imputation credits under your name, in the family trust or in a SMSF.

Get the tax structure right

To reduce the amount of tax you pay and protect your assets, it’s important you take advantage of tax-effective asset ownership structures.

An asset ownership structure refers to the way your investments are legally owned. It should reflect your family business structure (if applicable), your partner’s income and the level of asset protection you need.

Common asset ownership structures include:

• Property unit trust to protect assets and take advantage of claiming the interest on property loans.

• Company as corporate trustee or as a “bucket company”. A company structure is used more for business rather than investments.

• Self-managed super fund to build long-term wealth for the sole purpose of retirement.

• Family trust to protect family assets, manage tax and keep the family’s wealth in trust for all members of the family.

Don’t bury your head in the sand when it comes to tax! By taking control and creating an effective tax strategy, you can save money, build your assets, and be well on the way to achieving financial liberation.

Next week in the Investorgetic® series, we will discuss how you can create and stick to a realistic budget to build your savings. 

If you want to know more, come and join Susan and her team at the next Money Intelligence Intro Workshop. Book here on Eventbrite for the next seminar on 22nd February 2017. 

_________________________________________________________________________________

Susan Wahhab —CPA, SMSF Specialist, Entrepreneur, Working Mum, Small Business Supporter— is Australia’s leading Financial Strategist and Money Mentor. Susan is the founder and managing director of Accounting and Financial Services firm Winner Partnership Pty Ltd www.winnerpartnership.com  

Susan is the author of the transformational and practical book Money Intelligence®. Susan is passionate about helping people achieve financial liberation. At the age of six, she witnessed how her money-savvy mum (whom she calls the money manager) joined forces with her dad (whom she refers to as the money maker) to save the family business from bankruptcy and become financially free. Susan truly believes that people can become financially liberated by developing a healthy relationship with money. Buy the book in either printed copy or ebook and learn more about being money intelligent www.moneyintelligence.com.au

 

 

 

What kind of risks will you take to succeed?

What kind of risks will you take to succeed?

Part 4 - How to Become an Investorgetic®. The secret to becoming a Millionaire Series

Are you a risk taker?

I’m not talking about whether you’ve gone skydiving or bungee jumping. I’m talking about your attitudes towards financial risk.  

If you want to create a solid financial strategy, you need to invest your money. But investing is a risk. It is impossible to know with absolute certainty that your investments will succeed. However, there is a world of difference between taking a gamble and taking a considered, calculated risk focused on realistic financial returns.

The investments you undertake must fit with the level of risk you are comfortable with. Understanding your risk profile is crucial to this. Your risk profile helps you determine how you should invest your money for maximum gain. It encapsulates your attitude towards debt, your tolerance of market volatility, your concerns about loss of capital and your investment comfort level.

Not all investments work for all people. If you are risk averse yet dive headfirst into a volatile market, chances are your investment will fail. If you can make investment choices based on your core money values and attitudes, you will have more chance of achieving investment success – and financial liberation.

What determines your risk profile? 

Your risk profile is shaped by numerous factors, including:

·      Your investment experience.

·      Your ability to understand financial matters.

·      Your investment time horizon, eg. 10 years, 20 years or 30+ years.

·      The importance you place on understanding what you are investing in.

·      Your tolerance level towards investment loss and the timeframe in which you can tolerate the loss.

·      The level of cash you have available to top up investment losses or unexpected expenses.

·      Your income and tax rate.

·      Your level of personal debt, eg. mortgage and credit card debt.

·      Your desired retirement income.

The “pillow test” is a tactic I regularly use with my clients. I ask them: “Would you sleep easy at night if you invested X amount and borrowed X amount?” Their answer helps determine their risk profile. You don’t want to spend night after sleepless night agonising over your investment decisions, no matter how high the potential returns.  

Where are you on the risk profile spectrum?

There are five areas in the risk profile spectrum: Conservative, Balanced, Progressive, Assertive and Aggressive.

1.     Conservative:  A conservative investor is afraid of losses. They have the most basic understanding of investment markets. They focus on protecting their capital, seek moderate returns and are prepared to only take a very low level of financial risk.  

2.     Balanced: A balanced investor is also a low-level risk taker, yet is prepared to establish a more diversified investment portfolio. They have a reasonable understanding of investment markets. While they are wary of potential losses, their focus is more on possible gains.  

3.     Progressive: This type of investor is focused on opportunity and quality investments. They are more accepting of market fluctuations and can accept higher levels of investment risks. They have a long-term investment time horizon and seek to achieve a moderate rate of growth on the capital they invest.  

4.     Assertive: An assertive investor is focused on capital growth and accumulating wealth quickly. They have a solid understanding of all major investment markets and get a thrill out of taking financial risk. They have a long-term investment time horizon and understand that higher the level of risk, the higher the potential gains. 

5.     Aggressive: An aggressive investor has a superior understanding of investment markets. They know that high volatility and high risk are central to high-value investments. They predominantly invest in shares, staying focused on possible gains. They think for the long term and expect high-level returns.

So, where do you sit in the risk profile spectrum? Are you preoccupied with losses or do the potential gains override your concerns?

Don’t worry if you fall into the conservative category. You don’t need to be an aggressive investor to experience favourable returns. But it’s imperative you seek expert financial advice to make the best investment choices for you.  

Next week in the Investorgetic® series, we will discuss how you can use the tax system to your financial advantage.

_________________________________________________________________________________

Susan Wahhab —CPA, SMSF Specialist, Entrepreneur, Working Mum, Small Business Supporter— is Australia’s leading Financial Strategist and Money Mentor. Susan is the founder and managing director of Accounting and Financial Services firm Winner Partnership Pty Ltd www.winnerpartnership.com  

Susan is the author of the transformational and practical book Money Intelligence®. Susan is passionate about helping people achieve financial liberation. At the age of six, she witnessed how her money-savvy mum (whom she calls the money manager) joined forces with her dad (whom she refers to as the money maker) to save the family business from bankruptcy and become financially free. Susan truly believes that people can become financially liberated by developing a healthy relationship with money. Buy the book in either printed copy or ebook and learn more about being money intelligent www.moneyintelligence.com.au

Your Future Depends on the Now

Your Future Depends on the Now

Part 3 - How to Become an Investorgetic®. The secret to becoming a Millionaire Series

Focus on Financial Liberation: Introduction and Step 1 

Your retirement may seem like a distant dream; something to worry about later on. Yet what you do now – how much you earn, spend, save and invest – determines how much money you will have in retirement.

How much money you will need depends on the kind of lifestyle you want. Do you want a frugal retirement, living week to week on the pension? Or do you envision yourself debt free, living in comfort off your own savings and investments? 

It is never too early to transform into an Investorgetic™. You can start working towards a financially liberated retirement no matter what stage of your life you are in. But the fluctuating global economy complicates matters. What is financially relevant now might not be in 20 years’ time.

For example, the erosion of investor returns has caused major economic upheaval. The rate of return for cash investments nosedived from 7.5% in 1995 to 2.5% in 2015. This has had a huge impact on people’s quality of life in retirement.  

So, when the world is faced with an uncertain financial future, how can you plan for your retirement in 20 or 30 years? And how can you plan for another 20 years after that?

Create your wealth road map 

No one can guarantee what their future will be. But you can understand and manage the risks by creating your wealth road map. A wealth road map considers various financial

scenarios – good and bad – and uses the numbers to create a sound financial strategy bolstered by wise investments.

Your wealth road map is not a one-off assessment. At the very least, it needs re-evaluation yearly and whenever you experience a major change in your circumstances.

Improve your current financial position

Before you can start planning for the long term, you must take an honest look at your present financial situation. What needs improving? What bad habits need nipping in the bud? Address these now to avoid financial headaches later.

1.     Reduce your credit card debt

Do you have credit card debt and little or no assets, equity or savings? Even a small amount of debt can snowball over time and ruin your chances of saving enough for a self-funded retirement. You must pay off – or at least reduce – your credit card debt before you start investing. It may even be prudent to refinance your debt by increasing your home loan. By doing this, you can reduce the credit card interest you pay by two thirds. However, you would also need to rein in your spending. Otherwise, you could fall into a vicious cycle of refinancing your home loan every few years to pay off your continuing debt.

2.     Finalise the family home

If you are renovating, building, selling or upgrading the family home, this must be finalised before you commit to a long-term financial plan. You don’t want to take on a hastened investment that ends up costing you dearly because you were too preoccupied with small to medium-sized goals.

3.     Manage your budget

At some point in the future, you will need to pay off your investment debts. If you currently struggle to budget and save, chances are you’ll struggle in the future, too. Failing to live within your means places long-term strategies and investments in jeopardy. To invest and build your assets, you must first work out your expenses, commit yourself to a realistic budget and regularly save money from your disposable after-tax income.

4.     Manage your bank accounts

Effective banking practices allow you to control your household expenses and manage your financial goals. For example:

  • Have no more than one credit card or debit card. Use this card to pay all the household expenses. Ensure the limit is no more than $2000.
  • If you have a spouse or partner, ensure both incomes are paid into your home loan/offset account.
  • Create separate accounts for holiday savings, household budget, education and investment/property. Set up monthly or fortnightly direct debit payments into each account.
  • The investment/property account can be where any rental income goes in and property expenses go out. If you don’t have a property, you can use this account to save for your own home, investment property, shares or managed fund.
  • The education fund can be a savings account or another offset account split against the home loan (where the balance offsets the home mortgage and the interest is calculated on the net amount). This allows you to save for your children’s education while reducing the interest on your home loan. Use money in this account for school fees, uniforms and books, and save for future private school and/or university fees. 

5.     Your age and retirement goals

If you don’t allow yourself ample time to grow your wealth and assets, you may need to adjust your lifestyle at retirement. People who start planning in their 40s have a 20-year horizon to work with. This gives them a much better chance of achieving their retirement goals than someone who is in their 50s with limited assets. However, when there is a will, there is a way. It starts with an honest money conversation.  

Once you have improved your current financial situation, you can start looking at ways to invest your money.

Stay tuned next week for how you can make wise investment decisions based on your attitudes towards risk.

_________________________________________________________________________________

Susan Wahhab —CPA, SMSF Specialist, Entrepreneur, Working Mum, Small Business Supporter— is Australia’s leading Financial Strategist and Money Mentor. Susan is the founder and managing director of Accounting and Financial Services firm Winner Partnership Pty Ltd www.winnerpartnership.com  

Susan is the author of the transformational and practical book Money Intelligence®. Susan is passionate about helping people achieve financial liberation. At the age of six, she witnessed how her money-savvy mum (whom she calls the money manager) joined forces with her dad (whom she refers to as the money maker) to save the family business from bankruptcy and become financially free. Susan truly believes that people can become financially liberated by developing a healthy relationship with money. Buy the book in either printed copy or ebook and learn more about being money intelligent www.moneyintelligence.com.au

 

 

You want to live a big life? Have a Magna Vision

You want to live a big life? Have a Magna Vision

Part 2 - How to Become an Investorgetic® The secret to becoming a Millionaire

Wishes, dreams, desires. There’s no room for fanciful thinking when creating your financial future. If you want to build your wealth, you need a vision. Not a fleeting, fluctuating vision. A considered, long-term vision bolstered by a plan of action. A Magna Vision.

Magna is the Latin word for “big”. A Magna Vision is a vision for your whole life: who you want to be, what you want to accomplish, what you want to have, what you need to experience. It’s not a five-year or 10-year plan. It’s a life plan. It’s what you want for yourself, your children and your grandchildren. It’s Magna! It’s bigger than yourself.  

Your Magna Vision is a prime motivator. If you’re someone who struggles with making the right money choices, it will be the driving force that gets you out of bed each day. It’s what ensures you take all the necessary steps to create sustainable change in your life. It will excite you and inject passion into everything you do.

What’s your Magna Vision?

It’s impossible to get results if you don’t have a firm grasp of what you want to achieve. Simply telling yourself, “I want to retire well and help my kids go to university,” is too vague. Take the time to work out precisely what your Magna Vision is.

Be as detailed as possible. What does retiring “well” mean? When will you retire? How many years do you expect to live after you retire? What will your expenses be? Exactly how much money will you need each week to maintain the lifestyle you want? How much will you need to save to be able to send your children to university?

Your Magna Vision does not belong to you alone. It affects your partner and your family. You can’t work it out on your own. You need to get the people closest to you on board. How can you achieve your Magna Vision if your partner is not on the same wavelength? You need to get the input and support of the people you love most for it to work. 

Make self-funded retirement a reality

Your Magna Vision allows you to be in full control of your financial future. Becoming self-funded at retirement is a Magna Vision. It means you have made the decision to retire without relying on the pension.

It’s a vision that makes sense on many levels: most people would struggle to live on the pension ($22,721 per year for a single and $34,252 per year for a couple). Also, the pension in its current form is unsustainable. By the time you reach retirement age, the government’s criteria might have changed and you will be ineligible, or it might not exist at all.

So, how can you start working towards a Magna Vision of self-funded retirement? You need to consider:

1.     Society’s needs: What difference do you want to make as you transition from our 9-5 or 8-6 daily existence? How will you do this?

2.     Your needs: What basic needs and expenses must be met for you to survive? What about other needs – the things that nourish your soul and make life worth living? Do you want to travel and explore the world? How much do you need to put aside for one-off purchases, such as a car and home? Do you want to move when you retire? If so, where?

3.     Your numbers: How much will this kind of lifestyle cost? Do you want to leave some money aside for your children? Do you want to leave any of your capital for your children or grandchildren? Or will you live off your capital and not leave anything for anyone? (Mostly couples and singles without children opt for this.) 

The amount of money you will need to have saved for retirement is determined by how much you will need each year to live the lifestyle you want (assuming your home mortgage is paid). For example: 

·      $50,000 per year income in retirement = $1.25 million investment

·      $70,000 per year income in retirement = $1.75 million investment

Trust the process

For a Magna Vision to become a reality, you must focus on the process. Trust that the process will deliver the outcome. If you are always looking at the outcome, and not all the vital steps in between, you’ll feel overwhelmed. You’ll wander off course and return to old habits. Find meaning and joy in the process, and celebrate all the small victories along the way.

Stay tuned next week for step 1 of creating a strategy for financial liberation.

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Susan Wahhab —CPA, SMSF Specialist, Entrepreneur, Working Mum, Small Business Supporter— is Australia’s leading Financial Strategist and Money Mentor. Susan is the founder and managing director of Accounting and Financial Services firm Winner Partnership Pty Ltd www.winnerpartnership.com  

Susan is the author of the transformational and practical book Money Intelligence®. Susan is passionate about helping people achieve financial liberation. At the age of six, she witnessed how her money-savvy mum (whom she calls the money manager) joined forces with her dad (whom she refers to as the money maker) to save the family business from bankruptcy and become financially free. Susan truly believes that people can become financially liberated by developing a healthy relationship with money. Buy the book in either printed copy or ebook and learn more about being money intelligent www.moneyintelligence.com.au

 

Don't let YOLO undermine your money goals

Don't let YOLO undermine your money goals

Part 1 of Investorgetic® Series - The secret to becoming a Millionaire

Are you someone who takes a "YOLO - you only live once” approach to money? It’s true that we should seize life with both hands and enjoy it as much as we can. But this is not an excuse to spend, spend, spend. If anything, it is more reason to take a long-term, responsible approach to your wealth.  

People are living for longer. If your idea of living life to the fullest is spending all your money on life’s luxuries, what happens if you live to 90 or older? Could you guarantee yourself a decent living for 30 years or more after retirement?

Consumerism has blinded us to the true sources of love, happiness and success. Advertising tells us we can find these things in products and services. We borrow to spend, and we spend to enjoy our lives. Most of us don’t even question this; it’s just what we do.  

Are you a Consumerholic? 

You may be thinking, “This isn’t me. I’m in control of my wealth and how I spend my money.”  

Maybe, maybe not. Look at the following list. You know you’re a Consumerholic when you:

  1. Feel the need to buy more clothes, bags, shoes and perfumes, despite having a cupboard full of these things (some of which you probably never wear).

  2. Live week to week and save none of your income.

  3. Spend more than you earn, accumulating personal credit card debt

  4. Pay for holidays and other luxuries with your credit card or home loan redraw, rather than saving for them.

  5. Believe a car is an investment.

  6. Ignore opportunities to invest (apart from paying off the mortgage).

  7. Are scared to borrow money to invest, yet have no issue with borrowing to consume, eg. for new furniture, overseas holidays.

So how do you score? Do any of these points ring true for you? If so, your spending habits need an overhaul. To build your wealth and retire in comfort, you need to change your spending habits and your mindset. You need to invest your money wisely. You need to become an Investorgetic®.

Find your inner investor

An Investorgetic® mindset is not about denying yourself enjoyment. It’s not about putting your life on hold and giving up all of life’s luxuries. Rather, it’s about living within your means – at every stage of your life.

So, how exactly is an Investorgetic® different to a Consumerholic? Typically, an Investorgetic®:

  1. Plans proactively for the long term.

  2. Ensures their daily actions are tied in with their long-term goals.

  3. Is careful with money. They plan, budget, save and live within their means.

  4. Focuses on income-producing asset investment.

  5. Saves money for emergencies and holidays.

  6. Puts money into an education fund for their children.

An Investorgetic® makes wise money choices that help them reach their financial goals. They get excited about investing – yes, such people exist!

They have a different approach to living life: they don’t rely on credit cards and they know the difference between necessary and unnecessary expenses. Every decision they make is pointed at building their long-term wealth.

But to know where to invest your money and what you want to get from your investments, you need to have a clear vision of what you want your financial future to be. Without a well-defined vision, nothing will change.

Stay tuned next week for Part 2 of the Investorgetic® Series on how you can articulate your Magna Vision.

 

_________________________________________________________________________________

Susan Wahhab —CPA, SMSF Specialist, Entrepreneur, Working Mum, Small Business Supporter— is Australia’s leading Financial Strategist and Money Mentor. Susan is the founder and managing director of Accounting and Financial Services firm Winner Partnership Pty Ltd www.winnerpartnership.com  

Susan is the author of the transformational and practical book Money Intelligence®. Susan is passionate about helping people achieve financial liberation. At the age of six, she witnessed how her money-savvy mum (whom she calls the money manager) joined forces with her dad (whom she refers to as the money maker) to save the family business from bankruptcy and become financially free. Susan truly believes that people can become financially liberated by developing a healthy relationship with money. Buy the book in either printed copy or ebook and learn more about being money intelligent www.moneyintelligence.com.au