Chances are, if you ever meet any financial planners, you’ll hear stories of clients who’ve walked in the day they retired or not long before, and then requested assistance.
Many believe that financial planning is only for the wealthy or those about to retire. The truth couldn’t be further from this. Starting early will pave the way to success. Potential triggers for seeing a planner include entering the workforce, getting married, buying a home or starting a family. It might sound a little cliché, but if you fail to plan, you may just be planning to fail.
We’ve all heard of the benefits of compound interest, but on the flip side, mistakes can compound too. A lack of diversification can impact a portfolio, as can a lack of understanding and failure to put protection strategies in place early. Starting salary-sacrifice payments into superannuation while young can be an enormous help. Finding out how to make the best use of a bonus is vital. Salary-packaging reduces tax and puts more back in your pocket. Do you know if salary-packaging is available to you?
1 in 5 workers will be unable to work due to disability during their lifetime. Are you prepared for all eventualities if you are a breadwinner and responsible for the bills and expenses of your household?
Many these days are retiring with debt due to a lack of planning. They are choosing to live each day with no thought for the future. Starting early will mean that you’ll need to save less over time. Now, there’s a great bonus!
Having your whole life ahead of you is a great position to be in, yet few plan for the long term. Retirement seems so far away, and you’re earning now and want to enjoy the fruits of your labour. Saving doesn’t mean impacting the life you live or the food on your table, but it does mean being sensible and looking at spending habits.
Keeping up with the Jones’s is a futile and expensive exercise. Often those who appear to being doing well are actually drowning in debt and have little put aside for a rainy day, let alone for their future.
Perhaps the gym membership is non-negotiable, but washing your own car and doing the lawn and the pool yourself can not only save you dollars, but help with your health and wealth also.
Luxuries that can be given up for long-term security may include brand label shopping, cable TV and regular meals out. Many get caught up in a great lifestyle and live totally beyond their means, piling up debt for home and personal items that they actually can’t afford.
Planning for a family means you may need to start living on one wage. Try doing that before the baby comes. Are you able to live on one income, paying your partner’s income into the mortgage to get ahead while one stays home to look after your child?
Many struggle with long-term education debt, dragging this through life for many years. Could you start a payment plan to bring down this debt more quickly and then fund other investments?
Actions now have a huge impact on your future. The earlier you start to plan, the better. The bottom line is that you have to plan and save now, enjoy life, and live within your means. Some planning firms now cater exclusively to Gen X and Gen Y clients, so make sure you find someone you’re comfortable with, who gets where you’re at and what you want to achieve.
Chances are, as a CEO, the age pension won’t be available and you’ll need to fund your own retirement. Starting early can reap rich rewards and may mean that the early retirement you’ve probably not even considered yet is on the cards after all.
