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It's not about money. It's all about Money Intelligence!

It's not about money. It's all about Money Intelligence!

In the beginning...

I began my business journey in 1995, while working full time for small accounting firms in Sydney. I drove around in my red Ford Telstar, doing people’s tax returns in their homes on weekends and in the evenings. Two years into the business, I bit the bullet and left the security of full-time employment for the bumpy, “joyful” ride of small business.

If you want to be successful, you need to know your money type

If you want to be successful, you need to know your money type

People often struggle in their careers because they don’t know their Money Type. Employers are also unaware of how their employees’ Money Type impacts their performance. How many skilled technicians end up struggling in managerial jobs? As one software engineer client told me, “I just want to go back to coding. I don’t want the extra money for a title. I don’t want to spend hours in meetings. I hate dealing with people!”  

Discover your Money Type and fast track your career.

Find Your Winner Circle & Build Your Wealth

Find Your Winner Circle & Build Your Wealth

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. 

How your friends impact your wealth

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? 

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.

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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

 

 

 

 

 

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.

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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

 

 

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