Planning your financial future doesn’t need to be difficult, scary, or overwhelming. It’s simply taking into account what you want to achieve and reverse-engineering your day to day to get the result you want.
A financial future and the plan that comes with it is often related to home buying, property investment, retirement, and of course, insurance. Let’s take you on a journey on how to plan your financial future. Everyone’s financial plan looks different, so take your time and approach this with a judgement-free and determined attitude.
Decide who will take ownership of the budget. Is it yourself? Is it you and your partner planning a life together? Or are you and your family looking at downsizing or planning for retirement? Who the budget is for will dictate how you approach this – if it’s two or more of you, deciding early on who is managing what will be imperative to a successful budget.
Keep reading to get started on your financial plan and start thinking bigger than today.
1. Set your goals
Take a step back from your current situation and think about what exactly you want to achieve in this life. Whether this is paying back debts, having a family, going to University or a Unitech, buying a home, or even saving for a much needed holiday. Sometimes it’s just as simple as saving $10 at the end of each paycheck, or putting a little aside for Christmas. Whatever the goals are, start small and achievable and work it out from there.
Make sure to keep in mind whatever goal you are planning for that there’s enough for insurance. It’s not the sexiest thing to think about, but insurance is in place to protect your wealth and your goals.
2. Pay off debt and start your savings
Figuring out whether to pay off debt and start your savings can be tough – but we’ve found debt often costs you more in the long run. Having some savings for an emergency fund can be helpful to ensure you don’t get back into debt, but paying off debt quicker will also keep you not overpaying, saving you money in the long run.
Not all debt is bad debt – for example, a mortgage! Having a home is a great step in the right financial direction. Some debts, like credit card debt, can really weigh you down. Try to pay over the minimum repayments to pay off debt quicker, and ensure you are putting enough aside to start building up a little safety net. This will give you peace of mind and see you’re sorted for the future.
3. Check your insurance
As above, we know insurance isn’t the funnest topic to talk about, but making sure you’re covered correctly will save you not only headaches down the line, but a heap of money.
Your insurance is created to future-proof you and your family from any unexpected events. We can always think about an accidental crash, dropping your iPhone, or even your kid throwing a ball into a window, but we don’t think about what actually brings in the income. If something happens that impacts our ability to earn, all of the wealth and hard-work we have achieved will be for nothing.
Making sure you are correctly underwritten and have all of the t’s crossed and i’s dotted will ensure you are covered, no matter the situation.
4. Plan for retirement
Another not so sexy topic: retirement. For many of us, it still feels like years away. But retirement does sneak up on us quicker than we even realised – which is why things like KiwiSaver is so helpful at building our long-term wealth. If you’re a salaried employee, it’s taken out before tax, so by the time your paycheck enters your account, you barely even notice.
5. Set a time to review your plan
As we’ve learned over the last couple of years, things can change very quickly. A lot of the time, big things can impact our ability to earn, save, and spend, or little things can too! Set yourself time to review the plan every three months, we reckon. Put it in your diary, recheck your goals, and see where you’re at. Not only will this hold you accountable to your plans, goals, and actions, but it will help you reflect on how you’re tracking.
6. Check how far you can plan out
We find the best plans are the ones you can plan out for over a year, or even over 18 months. If you know you want to go on a trip, spend up for your family for the holidays, or make sure there’s enough budget for how you actually shop and spend on clothes, ensure there’s enough set aside for these things as you plan it out. We know that accidents, mishaps, and the occasional expensive surprise shows up, so check there’s enough in an emergency fund to cover that too.
7. Be realistic
Be really realistic with the plans and your expenditure. How much do you actually spend over the summer and holiday season? Is that $5 coffee a necessary ritual for you, if it is, then keep it in. How much do you need to spend on grooming? Give yourself the necessary space and realism to actually plan ahead and make your budget work for you.
The best plans are the ones that actually give you the freedom to move and change along with it. Budgeting and planning your financial future is no easy feat, but once you have a guide in place, things seem to start falling into place. There’s an unparalleled sense of achievement when you do hit a goal, so why not start small and get something together?
If you’re wanting to start getting a plan in place, why not get in touch with one of our financial advisers? We’re pretty good at providing some excellent framework, if we may say so ourselves. Reach out to us today.