Are your finances in shape? Get “money-fit” with these tips

We all know that if we want to keep our bodies fit and in good order it takes some effort – make a decision to commit, get organised and have a battle plan, and then just do it.

So why would our financial health and wellbeing be any different?  It doesn’t just happen on its own! Are your finances in shape?

Here are five tips to get your finances fit and healthy.

1. Set a target
When you know the kind of future you’re planning for and what you want to achieve along the way, you’ll be better motivated, better focused and better financially prepared.

So whether you want to retire comfortably, save for your children’s education costs, buy a home, or take the holiday of your dreams, start by setting a target you can focus on.  Why not “all of the above”?

2. Don’t skimp on the training
You can’t just wake up the week before a marathon and decide to be part of the race, with no training or preparation. And you can’t just wait until you turn 60 before you start saving for retirement.

It is much easier to build up speed and strength, little by little. It’s the same with investing: Time is the main ingredient to achieve “the miracle of compounding” (earning interest on your interest).

3. In for the long haul
Like a marathon, if you try and do too much too quickly it could all end earlier than you hoped.

A disciplined savings plan that builds your wealth gradually is a very effective way to get you where you want to go, without suffering too much pain along the way. Even a small amount can build up to something surprisingly big over time.

For example, if you put $1,000 in a managed fund at age 30 and then invested just $100 a month, you would have saved more than $59,000 by age 50 (assuming 7.7% growth annually after fees). If you waited until age 40 before getting started, you would end up with only around $19,000.*

4. Mix it up
Just as you should mix up your physical training sessions with intervals, hills and cross-training for greater impact, it makes sense to use a variety of different investments to spread risk and to better enable you to reach your lifestyle goals.

So while it may be tempting to focus on paying off your mortgage, don’t forget to pay attention to your superannuation and other investments as well. A mix of investments inside and outside of superannuation could help you achieve your goals both now and in the future.

5. Get a good coach
Every athlete would perform better with expert advice from someone who knows the race profile, the terrain and devises a personalised training program. And that’s exactly the role a financial adviser plays when it comes to managing your money.

So if you’d like to achieve a financial PB (Personal Best), consider talking to Solace Financial.

 

Stephen Horton  CFP®  B.Com
Principal / Financial Adviser

* Based on an investment return of 7.7% pa, inflation rate not included. This example is for illustrative purposes only and returns are not guaranteed in any way.

Stephen