How to be financially better off
Having helped women and men with money for more than 25 years, I know there are similarities but there are differences between the sexes too. The impact of gender pay gaps and spending time looking after children or elderly parents can’t be understated.
One of our long-term clients, Gillian Wright, notes that being financially free has allowed her to play regular golf as a part of her lifestyle, have funds to pay for end-of-year trips and regularly update her equipment. She’s now looking to pay for lessons to lower her handicap.
Here are some of the strategies my clients and I have worked on together.
Create a budget
Creating a budget is one of the most valuable things you can do. Budgeting can take a bit of time and can be boring, but the upside is that numbers can tell you so much. You should be honest with your numbers. If the result looks bad, then you may be able to fix it. If the result looks good, then you may have the freedom to do more fun things – like destination golf trips! There are lots of budgets floating around the internet, or you can e-mail me at the address below and I’ll e-mail you the one we use with our clients.
Have a second bank account
If you’re still working, ask your employer to put a portion away each payday into a second bank account. Saving for fun thinks like golf trips, golf clothes or updating your clubs is a great way to get what you want over time, rather than splurging now and worrying about the consequences later.
Having several months’ worth of living expenses saved away is one of the most important things you can do. Things do go wrong in life – sickness, unemployment, divorce – and not planning for them won’t stop them from happening. Putting money in a separate account, term deposit or saving via redraw in a mortgage are some of the effective ways you can do it.
Simple changes with debt can make a big difference
If you have credit card debt, make a plan to get rid of it. There’s rarely anything worse than credit card debt, because it’s typically the most expensive debt one has and it’s often for something you’ve already used. It’s usually best to get rid of this sort of debt.
Paying down a mortgage faster rather than slower is a great way to enjoy financial freedom later in life, with the most obvious strategy being to make additional repayments if you have spare cashflow. Lenders will often default your repayments to monthly, but there are huge savings to be made if your repayments are made more frequently. If you are paid weekly or fortnightly, consider having your repayments match that. A lot of loans have interesting features but many can benefit by having a simpler loan, which often means a lower interest rate.
Shop around
Insurances, loans, streaming services, phone and energy bills – so much of our financial freedom is chained to what we spend our money on. We can often get a better deal with our regular service providers by ringing and asking for a better deal. Either use those savings for a bit of financial breathing space, save it into that second savings account or invest it. Every little bit helps.
Don’t ignore your superannuation
Superannuation is often the biggest asset one owns, beyond the family home, yet it’s often ignored or rarely thought of. Shares are built for long-term performance, but they jump up and down a lot in the short-term. Cash doesn’t move much from one day to the next but isn’t designed for the long-term. One of the best things you can do is work with a superannuation adviser to set your superannuation investment mix so that it’s designed for your goals. Don’t just set and forget.
Asking for guidance
Financial advisers are here to provide guidance. In our business, we do some of our meetings on the golf course – it’s fun and it reduces the anxiety often associated with meeting in an office. But some of our clients prefer to meet over coffee or in our office. It’s important to find someone that fits you. It’s never too early, or too late, to implement strategies to help you be financially better off.
For more information on Dan Corbett or Superannuation Caddie, go to supercaddie.com.au or e-mail Dan at dan@supercaddie.com.au. Dan is an authorised representative, and Super Caddie Financial Advice (t/a King of the Mountain Financial Advice), is authorised by King Of The Mountain Pty Ltd ABN 72 642 974 061 AFSL No. 524853 to provide financial advice. The above information is general advice, and you should always check that it is right for you before you rely on this to make a decision regarding your circumstances.
