Long-term wealth is not guaranteed just because you earn a lot of money or have a big house. Nor is it something that can only be achieved by high-income earners. It’s something you achieve through conscious decisions and strategic planning.
In fact, it is often high-income earners who have the biggest cashflow trouble, often due to a mentality of keeping up appearances, rewarding themselves with hard work and justifying high expenditure with high income. Credit cards, overseas holidays, private school fees and cars can eat away at any salary – regardless of how big the earnings coming in might be.
Shaving off a bit of spending here and then accumulates to a lot of savings, regardless of your income. If it makes you feel better, you can avoid calling it “budgeting” and instead call it “securing my future” or “optimising cash flow”.
Once you have paid off your debt and slimmed down your expenses, then your cash flow will be available to build true long term wealth. Provided you’re following a plan and professional advice, you can put the cash to good use through investments and strategies.
- Axe the credit cards. Or cut them up. Or stick them in the freezer. Whatever you need to do to get rid of them. Focus on paying off debt, not creating more.
- Mindfully “save up” for that next holiday, or the new car, rather than just slapping it on a credit card.
- Have a plan, and find a professional who can hold you accountable to your financial goals.
- Shift your mentality. Identify what you’re spending your money on, and why. Stop focusing on instant gratification, lifestyle spending and keeping up appearances. Base your purchasing decisions on your core values. For instance, you may decide that education for your children and a safety net for retirement is more valuable than material objects now.
- Shop around (not in the way you think). Find better interest rates, more cost-effective insurance. Talk to your bank, consider shuffling the way your mortgage is set up.
- Change which account your income gets paid into. You might be able to set up a mortgage offset and transfer living expenses from there. Shift the money from where it can be automatically spent without thinking, to where it can be automatically saved without thinking.
How you can take action now:
1. Financial Health Check
Find out how you’re tracking right now, and see how to get to where you want to be in five, ten or even twenty years!
Financial health checks can help identify problems you might not have noticed, and can assist with setting realistic and important financial goals. Plus you get a professional on your side who can help give advice and hold you accountable when you need it!
We can help you with a free financial health check of your business, or your personal finances (or both). Register for a free Financial Health Check here.
2. Read our article on “how to save money”
This article does not just apply to people in their 20s. However – the earlier you start looking at building long term wealth and saving for retirement – the more money you’ll have to fall back on later!
3. Conduct proper retirement planning
Retirement planning should never be an afterthought. It plays too vital a role in your life to be continuously put off, ignored, or done poorly – especially if you own your own business! It’s not too early to start planning for retirement. The sooner you begin, the better prepared you’ll be, and you will be more likely to enjoy financial independence throughout your golden years.
Contact us to book a strategic retirement planning meeting today!