Planning is the key to making it financially

If you’ve paid off your home, have a healthy stash of super and take an overseas holiday each year, you’ve made it financially. That’s the view of many Australians according to recent research. 

 

 

A study by comparison site Finder found paying off the mortgage is the financial milestone 74% of Australians value most. 

Having enough in super to retire comfortably comes a close second for 59% of us, and one in three people see the ability to jet-set overseas each year as a sign of financial achievement. 

These are all reasonable goals, and definitely a lot more sensible than owning a sports car, which 5% of people say indicates financial success (for the record, cars are a dreadful investment!).

A plan of action

No matter what your financial goals look like, you’ve got a far better chance of achieving them with a plan of action in place. 

Let’s say for instance, that you’re keen on paying off your mortgage early. It’s a smart strategy that will leave plenty of spare cash to devote to overseas travel. And it can be done.

Start with your loan

The trick is to plan how you’ll get there with clear steps you can stick with over time. A good starting point is to check the rate you’re paying. The average variable rate is currently 5.3% – that’s a terrible rate when you consider there are plenty of loans costing less than 4%. 

If you’re sure your loan is competitive, one of the easiest yet most effective strategies to be mortgage–free sooner is to pay a bit extra off your loan each month. 

On a mortgage of $400,000 with a rate of 4.0%, tipping just $20 more into the loan each week could see you clear the slate 18 months ahead of schedule and pocket savings of $17,217 on overall interest.

Grow your super

If you’re keen to grow your super, talk to the boss about contributing to your fund through salary sacrifice. This is where part of your before-tax wage or salary is paid into your super rather than receiving it as cash in hand. 

Before-tax contributions are taxed at just 15%, which is below the personal tax rate of most workers, so salary sacrifice can be a very tax-friendly way to boost retirement savings. Chances are, after a few pay days you won’t notice the difference in your pay cheque but it can have a valuable impact on your final nest egg.

Think about your money milestones

The start of the new financial year is a good time to think about the money milestones that matter to you – from building a portfolio of investments to starting a successful business or being able to retire early. Don’t just nut out some goals though, think about how you will achieve them, and start putting plans in place to make it all happen.

We can help

It’s an area where good advice can pay off. We will work with you to prioritise goals, and develop a roadmap of action that helps you work through your personal bucket list. 

 

by Paul Clitheroe AM 
Co-founder and Executive Director of ipac securities limited, Chairman of the Australian Government Financial Literacy Board and Chief Commentator for Money magazine.

 

Prosperity Financial Planning Pty Ltd (ABN ABN 91 161 761 208) trading as Prosperity Financial Planning is an authorised representative of Charter Financial Planning Ltd ABN 35 002 976 294, Australian Financial Services Licence and Australian Credit Licence No. 234665

Financial Services Guide | Legal Disclaimer | Privacy Policy | Terms & Conditions

General Advice Warning: This website contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.

You don't have to be great to start, but you have to start to be great.

Zig Ziglar

Coming together is a beginning; keeping together is progress; working together is success.

Henry Ford

You must be the change you want to see in the world.

Mahatma Gandhi

Where there is no vision, the people perish.

Proverbs 29:18

The only thing to do with good advice is to pass it on. It is never of any use to oneself.

Oscar Wilde