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Tips to get ahead financially

Time to get out of your COVID bubble, check your financial situation, set some goals and reduce debt whenever possible, says wealth educator Leah Oliver.

Speaking to nestegg, Ms Oliver the earlier you start th eplan your financial goals, the easier they'll be to achieve. 

"The golden rule with young people is that they have time. Well-managed wealth portfolios thrive on time," she said.

"Young people have time to gather strong investments, which over time will provide them with valuable assets, passive income and financial security. Older people on the other hand can’t get their time back, they have less time to achieve more.

"The first thing we need to do is present our numbers. We need to understand what our personal income streams are, what it is costing us to live, and how much is left over. We need to know the numbers.

"This starts with an accounting file on your personal life – which looks at cash in and cash out. Once we have this data, we can do a number of things. We can assess your income streams, your spending habits and your ability to accumulate surplus (savings).

"From this info, we can multiply income streams, minimise spend and thereby maximise surplus. And from here we can predict how long it will take to pay off your home and debt on successive investments. This is wealth planning.

"Map out your personal goals. And implement strategies to achieve them. How do you visualise your life in two, five [and] 10 years’ time?"

Many people overextend because they don’t look at their numbers in the first place.

"Setting simple but solid goals is one way to increase your income, as too is paying off debt as soon as possible.

"Young people need to be focused on paying off their homes, fast-tracking, building income streams and tweaking spending habits. And recognising the value of time," she said.

"Using their personal accounting file, we can project how many years it will take a young couple to pay off their home. Living modestly, a remaining debt level on the family home around $200,000 is a suitable benchmark to consider moving then into a geared investment.  

"Once the house is owned, investments can be funded with savings that are ‘spare cash’ rather than ‘necessary cash’, which lowers risk. 

"These days it’s impossible to become wealthy and have freedom of choice if you don’t have dedicated streams of passive income. It is all about your income streams.

"Passive income is the money you make while you’re asleep and is generally in the form of investments, sensible strong investments."

How do you plan to recover financially from the pandemic? Have you started setting financial goals?

8 comments

Good advice, but in my experience young people want it all now, including new cars, overseas holidays and living the high life with no thought for the future.

Well, I'm glad that's only in your experience! I know heaps of young people who are smart, budget conscious think of the future and financially savvy...including my own children.

Lucky you, Sophie.  One of my children followed sound advice and has a home and family the other has a huge credit card debt from an excessive lifestyle.

Yes, a lot of luck Buggsie..mind you, we had a few rough patches with one boy but decided the best thing to do in the long run was to allow him to fall flat on his face a few times...it worked. He's a hard working architect now!

Financial advice starts when your children are young; teach them to save,no matter how small an amount , it is the regular time that counts not the amount .  Not all young people want the things that 'Buggsi " mentions  only the ones that have not been taught how to handle their finances; sure they got to have some fun  but they then look at how hard it was to achieve their funds  and then they reconsider their options; Money is ment for spending,it is also ment for accumulating independence or wealth.

So in a nutshell, do a budget and stick to it. And that budget includes savings. 

Best budget plan strategy ever is  "Zero Balance Budget". Try it.

Great info on budgeting. But, notuong on upping super by salary sacrificing?  Even another t5% (as per Barefoot) builds up from the SG.  I'm glad I learned about that in my 30s.

 

Commonsense should tell you .. you can't or shouldn't spend what you do not have.

Teach children at an early age how to handle money and the habit will stay with them all through life. If parents set the wrong example like buying now and paying later rubbish, they are teaching their children nothing.

3 rules, budget your income, including a personal 'tithe' for yourself, live off less than you earn, & little by little! Build wealth gradually but steadilly allowing time & compound interwest to work its magic, using your tithe. If repaying a loan, pay as much as possibble as soon as possible, ensuring there's enough for ALL other expenses.

Yes the rule never allow your wants to outweigh your needs

 

Teach them to budget and never buy what they can not afford to pay for with money they have  -- except maybe a house

Go into politics and you will do OK

8 comments