It’s a question that often results in the same answer, just a little bit more then I currently earn!
Think back to your first job. I bet the pay cheque wasn’t huge, but somehow you managed to do all things you did on that wage. Now, think about how much you currently earn. You may be able to afford nicer cars, clothes or TV’s for example, but I bet you wish you still had more.
The key to getting the most out of what you earn is by working to a budget. As a financial adviser, know “budget” is an unpopular word. However, a budget doesn’t necessarily have to be a complex strategy written up in an Excel spreadsheet, it can be as simple as setting a financial goal and then working backwards.
Say you want to spend $5,000 on an overseas trip in two years’ time. Instead of waiting the two years and then putting $5,000 on the credit card, why not work backwards and calculate how much you would need to put aside each week to reach that goal? In this case, you would only need to put away $50 per week to realise $5,000 in two years.
Further, individuals could consider opening a high interest savings account with your bank (all the banks have them) and arrange $50 to be automatically sent to the high-interest account each week. This way you will reach your savings goal without thinking about it or accidently spending the money.
Using a separate savings account and having money directed to this account automatically is a great way to budget for short-term saving goals without having to do too much work. If you have a long term savings goal, such as a house deposit or your kids’ education, then you may want to consider other options including shares or property investments, tailored for longer timeframes.
The beauty of budgeting this way is that you can still spend every cent in your transaction account, but at least your savings are automatically squirreled away without you even having to think about it!
If you would like further information on wealth creation strategies, please read more of our blog posts on Hewison Live or consult a financial adviser
Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.
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