Getting an Early Start with Retirement and Estate Planning
As with most things in life the earlier you start something the greater the impact, and planning for your future is no different. With the majority of people leaving retirement planning until the time children are almost finished school or left home (if they ever do) they often find themselves with limited time to grow their wealth and plan for their financial future.
Young people and those with young families are usually time poor, they want simple solutions that are easy to implement. By starting early you not only get a great head start but also set a good example for your own children. Putting a plan in place doesn’t need to be difficult and the results can be huge.
Here are five simple steps to implement today.
1 – Pay yourself first
This means put your savings away first then live on what’s left. Managing cash flow from an early age is vital and a great skill to master. As your salary increases try not to just keep increasing your living costs.
2 – Know the difference between good and bad debt
When you’re young personal debt doesn’t seem like such a big deal, but getting a bad credit rating can be serious. Good debt is borrowing to build wealth, this is often deductible and the purpose behind it is to grow an asset. Bad debt is borrowing for lifestyle or to buy things that decrease in value (such as cars, boats and holidays).
3 – Consolidate your super
If you’ve had a number of jobs growing up chances are you’ve got multiple super funds, and this means you’re probably paying multiple fees. Take ownership of your superannuation, it is your money; you just can’t access it yet. Roll it all into one fund and reduce your fees and also think about contributing voluntarily, compounding returns can pay off big time between now and retirement.
4 – Start investing today
Start a small investment plan; it’s often time IN the market not TIMING the market that makes the largest difference. You can start with as little as $100 a month and build from there.
5 – Don’t forget to protect your largest asset – YOU
Your capacity to earn income is your largest asset. Picture your life if for some reason you could no longer work, sure, sick leave will help out for a few weeks but then what? We all pay for motor vehicle insurance with little question, but chances are if you had a serious car accident you would be in the vehicle too.
The Money Edge | Bundaberg